Devolution, energy and infrastructure investment were some of the key drivers in John Healey’s first Budget.

Giving local leaders greater control over funding and tax revenues, the Chancellor said the government is seeking to drive growth across the UK.

Healey said the Budget would provide “breathing space” for households and businesses while laying the foundations for long-term economic growth through regional investment and infrastructure delivery.

The most significant announcement for the infrastructure sector was what the Chancellor described as the “biggest wave of devolution in a generation”, with mayors gaining greater financial powers to fund transport, regeneration and growth projects in their regions.

Under the plans, all business rates will be retained locally by the end of the decade, with 20% of revenues going directly to mayors from next year. Local leaders will also receive a share of income tax receipts from 2028, providing a new source of funding for infrastructure and economic development projects.

The Budget also includes new Good Growth Funds for mayoral authorities, support for areas moving towards devolved governance arrangements and an additional £1.5bn of devolved loans to support local investment.

According to the Treasury, the funding will help deliver projects including the Black Country Metro extension, the Bakerloo line extension, the reopening of Doncaster Sheffield Airport and regeneration schemes in areas such as Gateshead.

For consultants, engineers and infrastructure providers, the Budget signals a continued shift towards locally-led infrastructure delivery, with mayoral authorities expected to take a larger role in determining investment priorities and delivering growth projects.

While industry leaders will await further detail in next year's spending review, the Budget provides a strong indication that transport, regeneration and regional growth schemes will remain central to the government's economic strategy.

Milda Manomaityte, Chief Executive of ACE, welcomed the chancellor’s commitment to fiscal devolution and cheaper, cleaner energy which she says shows “the government understands that energy is the foundation of growth in every part of the country and decisions on local infrastructure are better made locally”.

“The ambition is right,” she added: “The infrastructure sector needs a stable, fully funded pipeline, clarity on the private investment models government expects us to rely on, and certainty that these commitments will survive the next fiscal event.

“Devolution is the defining theme of this Budget. Moving money and power closer to communities works if mayors and local authorities have the capacity and long-term settlements to plan and design schemes properly. Getting design right at the start is the best way to save money later. ACE will work constructively on behalf of members with the government to ensure devolution delivers for local communities.”

Richard Whitehead, chief executive - Europe and India at AECOM, added: “While this Budget makes some positive moves, it also raises some questions. Further action on devolution will drive infrastructure delivery and, while moves on mayoral capacity are welcome, partnerships with the private sector will remain essential to deliver large-scale schemes.

“The extra capital committed to the National Wealth Fund today is exactly the sort of stimulus that will boost investors' and clients' confidence to invest in new schemes, and the will there is to move quickly. However, a formal framework is needed to unite local authorities’ knowledge and new powers with the private sector’s resource and ability to deliver the infrastructure that will create jobs, boost business and generate growth in local economies.

“The sector’s attention has already turned to the 10-year plan that’s been promised before Christmas. As well as more guidance on how devolution will deliver firepower for mayors, we need to see how the government intends to take greater public control of key services and what learnings it will apply to a refreshed infrastructure strategy.”

Other Buget highlights included:

Devolution: The government is in the final stages of agreeing Mayoral Strategic Authorities for Devon, Plymouth and Torbay; Hertfordshire; Lancashire; Leicester, Leicestershire and Rutland; Stoke and Staffordshire; Surrey; Thames Valley (Oxfordshire, Berkshire and Swindon); and Wessex. There will also be and a single Foundation Strategic Authority for Cornwall, and a Strategic Authority for Kent and Medway. The Government will continue working with all remaining areas including places like Bedford, Central Bedfordshire, Luton and Milton Keynes, where there is broad agreement but not yet local consensus to agree a Strategic Authority as soon as possible, with the aim of achieving full devolution coverage by the end of 2028. 

Housing: The Your First Home Scheme will help 70,000 people onto the property ladder with a new First Time Buyer ISA will provide a simpler route to saving for a deposit. The budget also provides a further £1.5bn in funding for social and affordable housing, taking total capital investment over the next 10 years above £40bn.

Energy costs: A series of measures to try to cut bills, including scrapping a levy on bills to fund hydrogen to lower bills and moving older renewables onto fixed-price contracts. A win for 20 million households in council tax bands A to D who will receive a £100 energy payment paid directly into bank accounts.

Growth, data and AI: A new “British datacentre covenant” will force centres to invest in the local area and ensure local water supplies are protected, and they will get faster grid connections and the ability to generate their own electricity.  A new Founders Relief aims to encourage founders to scale their companies here in the UK. The Budget also delivered the government’s most ambitious AI package yet, investing £700m to tackle the risks of AI while unlocking its potential to raise living standards, strengthen national security and support working people across the country. 

Infrastructure delivery: The government committed to fully delivering the findings of the Fingleton Nuclear Regulatory Review, the most significant reset of the UK’s nuclear regulatory system in more than 20 years. It is considering how the ethos and findings extend to other infrastructure sectors. As a first step, Rachel Skinner CBE will chair a review of rail infrastructure costs that will report in six months.

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