UK Chancellor Sets First Budget Date Amid Major Devolution Plans

Chancellor John Healey announced that the first budget of Prime Minister Andy Burnham's government will be held on October 28. Healey, who recently replaced Rachel Reeves as chancellor, stated that the budget will be built on fiscal discipline and will abide by fiscal rules to maintain economic stability and national security. He noted the need to balance these rules with the government's goals to increase spending on defense and social care, particularly amid financial pressures from the war in Iran.

A central pillar of the upcoming budget is a plan to transfer power and funding from Westminster to local regions. Prime Minister Burnham announced that local English mayors will be granted powers to retain and spend business rate taxes to stimulate regional growth. The government also intends to grant mayors a share of income tax revenues for the first time. While a whitepaper and roadmap on income tax will be unveiled during the budget, the shift in business rates is expected to begin next spring.

Estimates suggest these changes could result in significant funding shifts. A report from the think tank Re:State suggests that if mayors were allocated 2.5p of every pound from the basic rate of income tax, London could receive over 2 billion pounds, while Manchester and the West Midlands could each gain over 600 million pounds. However, the government has faced some internal friction regarding how this money is used. While some mayors have suggested issuing tax rebates to residents, First Secretary of State Louise Haigh stated this would not be possible at the moment. Prime Minister Burnham has rejected the rebate idea, arguing the policy is intended for growth and investment.

This shift is part of a broader political philosophy referred to by Burnham as Manchesterism. This approach emphasizes regional devolution, public control over assets such as transport and housing, and a rejection of trickle down economics in favor of growth in every postcode.