Healey to set out £1.5bn borrowing plan in devolution budget

Chancellor John Healey will include plans for a £1.5bn borrowing facility in his first budget on Wednesday, according to the Guardian, as part of a drive to devolve spending power in England. The proposed facility will be developed in collaboration with mayors over the next two years, placing local leaders at the centre of its design.

The announcement follows Andy Burnham’s promise that local leaders will no longer have to approach Westminster “cap in hand”. His remarks frame the budget package as a shift in who makes spending decisions, alongside its stated ambition of supporting growth. The central proposition is that more decisions should be taken locally rather than depend on approval from the centre.

The borrowing proposal is a central element of the reported package, but its development timetable distinguishes Wednesday’s announcement from its eventual operation. A plan drawn up over two years would leave important implementation work beyond the budget itself. The announcement therefore represents the start of a process, rather than confirmation that the full facility will immediately be available.

The report also outlines £285 million in initial local growth funding and £150 million to strengthen councils’ capacity. These measures would accompany the proposed borrowing facility rather than replace it. Together, they suggest that the package addresses both access to resources and the ability of local institutions to put spending decisions into practice.

The distinction between borrowing and funding matters when assessing the headline figure. A borrowing facility is not equivalent to an unrestricted grant: its practical value will depend on the conditions attached and the commitments borrowers must meet. The supplied announcement does not establish those terms, leaving the £1.5bn figure an indication of the proposal’s scale rather than a complete account of its effects.

Collaboration with mayors will be another test of how the devolution pledge translates into policy. Their involvement offers a route for local priorities to inform the facility’s design, but participation alone does not settle how much discretion they will ultimately receive. The balance between local choice and central oversight will depend on the arrangements that emerge.

For the growth agenda, the key question is whether additional spending flexibility leads to decisions that meet local needs more effectively. The package’s stated purpose is to boost growth, but an announcement cannot establish that outcome in advance. Its significance will rest on how the powers are structured and subsequently used, not simply on the amount announced.

Wednesday’s budget is the next opportunity for Healey to explain the scope of the package and how its elements fit together. Work with mayors over the following two years will then shape the borrowing proposal. That process will provide a clearer measure of how far Burnham’s promise changes local leaders’ relationship with Westminster.