England's Mayors Gain Control Over £1.5bn in Borrowing Powers

English mayors will soon be able to fund local housing and transport projects without first seeking individual approvals from central government, a shift announced by Prime Minister Andy Burnham. The plan allows regional leaders to set their own spending priorities rather than waiting on Westminster.

The package begins with a £1.5bn borrowing facility for mayors. An additional £285m in growth funding will be allocated next year, with local leaders deciding how to spend it on issues such as transport links or high street regeneration.

In the United States and parts of Europe, local governments routinely issue their own bonds to finance development. English regional mayors have long argued that their restricted borrowing authority limits their ability to act on local needs.

Burnham, who previously served as mayor of Greater Manchester, framed the change as a break from established practice. "I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country," he said. He noted that he had previously promised to move decisions closer to home, and said tax and spending in the UK is more centralized than in many other leading economies.

The timeline for implementing these changes begins this Wednesday, when Chancellor John Healey delivers his budget statement. Healey is expected to provide further details on a revenue-sharing model during that address. Under the proposed system, local areas would retain a portion of the additional income tax revenue generated by a stronger local economy, a mechanism intended to incentivize growth-focused policies.

The initial growth funding is designated to bridge the period until 2028, when the new revenue-sharing system is scheduled to begin passing income tax revenue directly to local areas. Healey's predecessor, Rachel Reeves, first proposed that revenue-sharing idea earlier this year.

To address concerns raised within the Treasury regarding the capacity of some local authorities to manage larger budgets, the chancellor will allocate £150m for administrative training. Healey stated that the government is providing "more money, more power and more capacity to get projects moving, build homes and make the right decisions for their areas."

The proposal was developed in conjunction with No 10 North, which holds weekly meetings with local leaders regarding barriers to economic growth. Following the budget, a white paper on "rewiring the state" is scheduled for release, detailing how the civil service will be restructured as powers are transferred from Whitehall.