Credit: HM Treasury/Crown Copyright
With a pledge to rebuild the economy without a return to austerity, the Budget was shaped by a fundamental tension - balancing the need to tackle fiscal pressures, and outline measures that would meet its growth objectives without reneging on manifesto promises.
Accepting that regional investment is critical to growth, Reeves pledged ongoing devolution to build on the government’s approach to broad-based economic growth. “The benefits of investment and growth must be built and felt in every part of our United Kingdom,” Reeves said.
In what the government described as a “historic commitment to fiscal devolution,” the government confirmed that it is devolving at least £13bn of SR25 funding for seven Mayoral Strategic Authorities: Greater Manchester, West Midlands, Liverpool City Region, West Yorkshire, North East, South Yorkshire and the Greater London Authority, representing nearly 40% of people in England.
This will empower mayors with local control over a single flexible pot for growth and public services priorities, aligned with their local growth plans. Reeves said the government remains committed to rolling out integrated settlements to more places at the next Spending Review.
“The benefits of investment and growth must be built and felt in every part of our United Kingdom, so we are providing an additional £370m for the Northern Ireland Executive, £505m for the Welsh Government and £820m for the Scottish Government over the spending review period through the Barnett formula,” Reeves said.
The government has also committed £902m over four years for a new local growth fund for the 11 mayoral city regions in the North and Midlands with the highest potential for growth. This will allow mayors to invest in key local growth projects. Scotland, Wales and Northern Ireland will also receive £783 million through a local growth fund to support regeneration across the UK.
Meanwhile, Reeves said substantial plans for reform of special educational needs (SEND) provision would be set out early in the new year. Future funding implications will be managed within the overall government DEL envelope, meaning that local authorities will not need to fund future SEND costs from general funds, once the Statutory Override ends at the end of 2027-28.
The government will set out further details on its plans to support local authorities with historic and accruing deficits and conditions for accessing such support through the upcoming Local Government Finance Settlement.
Hidden in the Budget small print, a pledge to invest £18m over two years in up to 200 playgrounds across England would support the government’s commitment to Pride in Place. Analogies with the raucous mood in the Commons aside, with the OBR downgrading its GDP growth forecasts for 2026 to 2029 to 1.5% down slightly from its 1.6% March forecast, Reeves’ follow up Budget was never going to be a walk in the park.
