Budget 2026: Who wins from fiscal devolution

The Budget’s fiscal devolution roadmap promises greater control over funding for England’s mayors and councils, alongside new ways to invest in local growth. But who stands to benefit, and how much additional spending firepower is actually on offer?

Mayors and strategic authorities

Mayors are the clearest beneficiaries of the proposed changes. From April 2027, they will receive a 20% share of locally retained business rates, followed by a share of income-tax revenues from April 2028.

This should give mayors a much stronger stake in the growth of their areas. Successful investment in jobs and economic activity would generate additional resources to reinvest, while more predictable funding should make it easier to plan.

Plans to give strategic authorities the power to introduce an overnight visitor levy provide another potential source of local revenue. A £150 million uplift in capacity funding for 2027–28 will also help authorities build the expertise needed to manage greater responsibilities.

The qualification is that this is partly a replacement funding model. Mayoral tax income will take the place of existing Investment Funds, Mayoral Capacity Funding and Local Growth Funds with the exact details to be set out in the 2027 Spending Review.

Local authorities

The government’s ambition is for local and regional government collectively to retain 100% of business-rates income by the end of the decade, with councils’ share rising to at least 70%. This will strengthen the connection between commercial development and local funding.

For councils, the opportunity is to make a clearer case for investment that expands the local economy and supports public services over time. Retaining more of the proceeds could also make it easier to justify spending on the infrastructure needed to enable development.

Developers and investors

For developers, the most practical opportunity may be stronger public sector partners, which are incentivised to support development.

With new business-rates and income tax retention, local leaders will be keen to use their resources to enable growth through regeneration, infrastructure and private sector investment.

The £285 million of seed funding for Good Growth Funds in 2027–28 is intended to help places combine public funding with private investment. A £1.5 billion borrowing facility for mayoral strategic authorities is also due to become operational from April 2028.

For developers, demonstrating how a scheme contributes to the Local Growth Plan will become increasingly important. Jobs, connectivity and benefits for existing communities will be critical.

Early engagement with strategic authorities, constituent councils and local stakeholders should therefore form part of developing the investment case. A credible project will need both a workable financial model and a clear account of what it delivers for the wider place.

Fiscal devolution could prove one of the Budget’s most consequential changes for regeneration and growth. Its impact will take time to emerge. The test will be whether the funding settlements that follow give local leaders the resources and flexibility to back investment and delivery.