Autumn Budget 2026: Devolution, devolution

Wednesday 28 October 2026 marked the first Budget of the Burnham Government with John Healey as Chancellor. Amongst the range of announcements made, one of the key themes was a greater drive for devolution - local leaders making local decisions. 

Devolution has been framed as a key lever for the Government to achieve its aims of “delivering growth in every postcode”, and the Budget revealed a new tool in Strategic Authorities’ toolkits: fiscal devolution. 

So… what has been announced?

What is fiscal devolution?

Starting with the big change affecting the pockets of Strategic Authorities across England: fiscal devolution. 

In essence, this seeks to enable a greater amount of tax receipts collected from local areas to be retained by local/regional government for investment in their regions. 

The Budget announced that, in the short term, Mayors will retain a 20% share of local business rates from next year (2027), with local and regional government to retain 100% of business rates income by the end of the decade. This is intended to replace grants being issued from central government. In addition, from April 2028, a share of income tax from a region will be retained by its Mayoral Strategic Authority. The Fiscal Devolution Roadmap published alongside the Budget makes it clear that this is a move away from central government in Westminster holding the purse strings, providing more financial autonomy for local authorities to meet local needs. 

Mayoral Strategic Authorities and Foundation Strategic Authorities will also have new powers to implement an Overnight Visitor Levy affecting overnight stays in their region. The Levy is intended to raise revenue for local investments and to improve the visitor experience, with the expectation that authorities will consult with local stakeholders and businesses before implementing such a Levy. 

Underpinning the receipt of local resources will be the establishment of Good Growth Funds, which are intended to enable local leaders to establish a single approach to local investment in order to achieve “catalytic regeneration and development”. The Government has announced a commitment of £285million in 2027-28 to support the establishment of Good Growth Funds, as well as a £1.5billion borrowing facility for Mayoral Strategic Authorities to utilise from April 2028. Further information on initial areas benefitting from Good Growth Funds and allocations can be located here.

What else is new?

Whilst fiscal devolution easily presents as the flagship policy, it is not the only change in the devolution world. 

The Budget revealed plans to establish 10 new Mayoral Strategic Authorities (which are at their “final stages” of being agreed). The Budget has announced that the intention is for full devolution coverage of England by the end of 2028.  

There is also the High Streets Strategy, comprising a new Derelict Buildings Fund (£125million) to transform buildings to meet local needs plus an additional £65million to rescue buildings and businesses at risk of closure (such as pubs and sports clubs). 

What does this mean for local authorities?

The Budget is clear in that the intention is “devolution not delegation”, and if that ethos materialises in practice then local leaders will have more freedom to act for their communities.  Therefore, the general direction of travel is welcome. 

It means local resources can be reinvested into local areas by local leaders who have an understanding of local needs. Funding is also available to help authorities transition into this brave new world. The greater retention of local tax receipts and business rates provides incentive for Mayoral Strategic Authorities to actively invest in projects that boost revenues across their region, supported by the funding measures outlined above. 

However, the changes will not happen overnight and it will take time for there to be a meaningful change in how government works. It also remains to be seen how local authorities will fare with the proposed changes to funding streams and how they will adapt (even with funding made available to facilitate this shift). The move away from central government grants will be a significant change regional and local governments need to grapple with. 

There is also no clear guidance as to how inevitable disparities in income across the regional governments will be addressed to prevent areas from being left behind. Hope can only take communities so far.

We will need to wait until the spending review in 2027 to have greater insight into the fiscal baselines for devolution. In the meantime, change is the name of the game, and it will be interesting to see how the government’s plans for fiscal devolution will translate into practice. 

What does this mean for local communities?

Communities are clearly at the heart of the Government’s decision to decentralise decisions to local and regional authorities. The Budget has made funding available for assets with local importance to be protected, together with supporting local organisations such as pubs and sports clubs, as well as our high streets. The incentive for local authorities to invest in their regions to grow their funding should also be welcomed, as this should translate into more investment in projects that matter for communities and give back to the region.

The Government’s ambition to promote “catalytic regeneration and development” is a positive signal for local communities, but the extent to which this will be achieved will be subject to how well local authorities adapt to their new devolved responsibilities. Local authorities will need to forge relationships with public and private investors as part of this journey and whilst guidance has been issued alongside the Budget (see: Supporting local investment: An offer to places - GOV.UK), adaptation will take time. However, the onus also rests with local communities to ensure that their voices are heard and that local priorities are communicated effectively to local leaders to invite investment into projects that will have the greatest impact for their area. 

As always, there is a lot to unpick with this Budget, so do keep an eye out for further insights from our team here at Anthony Collins.