New funding plans will give mayors more autonomy to boost growth

However, while the rhetoric about money and power leaving the Treasury will be welcomed by local leaders up and down the country, those leaders may have a few questions they’d like answered before getting too excited. Chief among these will be how exactly the changes will be implemented, and what government’s plans are for areas that do not currently have a devolution deal. 

A tourist tax is an important step towards greater fiscal devolution

The government plans to give mayoral strategic authorities (MSAs) in England the power to introduce an overnight visitor levy. Unlike the voluntary city visitor charge already operational in Manchester and Liverpool – where local businesses agree to collect the levy and funds are ringfenced to support its visitor economy – this new power will be mayoral, offer more flexibility in how the money is used, and is expected to generate substantially higher income, though estimates remain uncertain. 

This will provide mayors with a new source of revenue to invest in local growth and support regeneration. Many mayors have long called for such a power, so the chancellor’s confirmation that this will happen will be welcomed as an important first step towards fiscal devolution. 

However, while the government has agreed in principle to devolve this new lever, it has not yet worked out precisely how this levy will operate. It has instead kicked off a consultation process that will gather evidence on questions including how levy rates should be calculated, how revenues collected should be used and what types of accommodation should be included.

The integrated settlement will give seven mayoral regions more funding certainty

The government confirmed the integrated settlements for the seven “established” mayoralties in England over the 2025/26-2029/30 period. Under this approach more than 30 budget streams from across Whitehall – grouped into seven thematic areas such as economic development and regeneration, skills and employment support – are consolidated into one single pot. 

This system already operates in two mayoralties, Greater Manchester and the West Midlands, for the 2025/26 financial year. But in this year’s spending review, the government announced that five further areas would get access to this greater level of fiscal flexibility and medium-term certainty. These mayoralties will have greater discretion over how funds are used, and can transfer up to 10% of funding between themes; they can also shift money between years – enabling mayors to prioritise spending on key priorities.

On Wednesday, £13bn was confirmed over the 2026/27 to 2029/30 period for regions representing 40% of England’s population, with the highest settlements for GMCA and WMCA. However, some funds have yet to be finalised for the other strategic authorities including in areas such as building retrofit, consolidated local authority bus grants and homelessness and rough sleeping. And, unlike other MSAs, Greater London’s integrated settlement does not include transport spending as this is administered separately.

Regions with mayors will get further growth levers

The tourist tax sits alongside a series of other sizeable commitments on regional growth funding. These included:

• £902m over four years for a new local growth fund for 11 mayoral city regions in the North and Midlands
• a £500m ‘mayoral revolving growth fund’ for mayors, again in the North and Midlands, to finance growth projects and attract private investment. 

It is welcome that these funds will allow mayors discretion over allocation – a contrast with the Growth Mission Fund, for which central government ministers have chosen specific projects such as £16m for a STEM centre in Darlington and £20m for a sports quarter in Peterborough.  

Taken together, these measures suggest that the government remains committed to empowering local leaders to drive regional growth and regeneration. However, many of the commitments apply only in places that have already adopted the mayoral devolution model. Leaders of areas not currently covered by any form of devolution deal – who together still represent nearly half of the population – may well be wondering when they might receive similar boosts. 

The UK is still highly centralised – there is plenty of room to go further

These positive steps toward greater regional autonomy should not be the end of the road. Even with new tourism levies, England remains a highly centralised country with mayoralties relying heavily on central funding. The government could go further: introducing more local taxation powers would, for example, further strengthen autonomy. Better accountability mechanisms for the integrated settlement are also needed that can safeguard public money without imposing rigid output metrics that risk constraining local decision making. 

Other mayoralties need to gain these powers, too; to that end, the budget was a missed opportunity to announce a decision on future integrated settlements for the East Midlands – which recently formally requested these powers. More broadly, it is still not clear how quickly the government plans to extend mayoral devolution, beyond the six areas on the Devolution Priority Programme. 

Such decisions should not be rushed and places need to be ready. At the same time, if this model is to be scaled across England, as the government says it intends to do, those decisions will be needed soon.