Budget 2026 Overview: Ensuring Benefits for Every Region Across the UK

The recent Budget presents a comprehensive suite of initiatives designed to foster local and regional growth, placing local leaders at the forefront of development in every community. This approach focuses on three primary goals: empowering local areas through devolution, harnessing the unique strengths of cities and towns to stimulate reindustrialisation, and unlocking the potential of urban centres and growth corridors to extend opportunities to adjacent regions.

Toolkit for Devolution Across England

Efforts will continue to engage with all remaining regions to achieve local consensus on establishing a Strategic Authority promptly, with the aspiration of achieving full devolution across England by the end of 2028, under the guidance of the Ministry of Housing, Communities and Local Government (MHCLG) and No.10 North. This announcement ensures that over 90% of the population will benefit from devolution, encompassing the entire North for the first time. Consequently, greater powers concerning issues such as public transport, housing, and skills development will shift from Whitehall to the localities.

A significant boost will be provided to local authorities through enhanced flexible revenue streams, with business rates transitioning to a fully locally retained tax by the decade’s end. Starting in April 2027, mayors will receive 20% of business rates, while local authorities will see their share rise to at least 70% in subsequent years. This shift is set to grant local and strategic authorities increased long-term certainty and a chance to benefit from local economic growth.

In addition, local authorities will receive support to combat avoidance within the business rates framework, ensuring that more funds remain within their communities. The government has committed to introducing a General Anti-Avoidance Rule as soon as feasible and will assist local authorities in contesting business rates avoidance through legal avenues by covering external legal expenses.

Investment in Housing and Community Infrastructure

An allocation of £1.5 billion has been earmarked to deliver 10,000 homes across England, with a focus on Social Rent, particularly for council housing. This investment raises the total commitment to the Social and Affordable Homes Programme to over £40 billion over the next decade, alongside the continuation of preferential borrowing rates for council house construction via the Public Works Loan Board for an additional year.

The government is also dedicated to reducing administrative burdens on local authorities by promising a reduction in the number of grants at the next Spending Review, alongside streamlined reporting requirements. This will empower local authorities to make decisions that best reflect the needs of their communities.

A further £125 million will be directed towards assisting 60 local authorities in England to transform underutilised buildings into spaces that meet community needs, ranging from health centres to civic facilities. This funding will also support local efforts to revitalise high streets through the High Streets Strategy.

Addressing Energy Costs for Households

To alleviate the financial strain caused by escalating energy prices, the government will introduce a £100 Household Energy Payment for households in council tax bands A to D, commencing in January 2027. This initiative aims to provide relief to up to 20 million households in England. Additionally, £100 million will be allocated to local authorities to offer further support to those most severely affected by rising energy costs.

The government is committed to collaborating with regional and local authorities to explore how enhanced local management of business rates policy can bolster growth and resilience, while safeguarding business stability and ensuring fairness in funding across different regions.

Strengthening Strategic Authorities in England

Looking ahead, the government will publish the Fiscal Devolution Roadmap, which will detail a new funding model for regional and local governance. This includes the assignment of income tax to all mayors starting in 2028, an increase in business rates retention for mayors, and plans to empower all Strategic Authorities to implement an Overnight Visitor Levy.

The first phase of new Mayoral Strategic Authority Business Rates Retention Zones will be initiated with nine authorities, pending Full Business Case approval and necessary legislation. This initiative aims to unlock commercial development, facilitate the implementation of local growth plans, and enable more tax revenues to be reinvested in the areas where they are generated.

Furthermore, £165 million will be confirmed for the 2027-28 period to assist mayoral areas in rolling out Good Growth Funds, extending resources to regions that did not benefit from the earlier City Densification Fund. A bespoke borrowing facility of £1.5 billion for Mayoral Strategic Authorities will also become operational by 2028.

Supporting Areas on the Path to Devolution

As the government approaches the final stages of negotiating ten new devolution agreements, this initiative will ensure that over 90% of England’s population will fall under a devolution arrangement, marking a significant step in the transfer of powers from Whitehall to local regions.

A £120 million share of Good Growth Fund incubator capital funding will be allocated for areas transitioning towards a devolution deal or Strategic Authority Status, fostering projects that contribute to regional growth.

The No10 North Priority Projects Programme will also be extended to cover regions that have signed new devolution agreements and those electing mayors for the first time in 2027 and 2028. This programme aims to help these areas identify crucial projects for their economies while facilitating government support to drive successful delivery through initiatives such as the Prime Minister’s Situation Room. Support will be provided to develop robust business cases where necessary.

Plans are also in place to allow Foundational Strategic Authorities and local councils to propose Business Rates Retention Zone projects as they advance through the process of establishing Strategic Authorities.