What a Mayor could actually do with real money
Everyone in local government is talking about devolution, but far fewer people are talking about the money. The money is where the power lies.
From April 2028, Mayoral Strategic Authorities (MSAs) will start to receive a share of basic rate income tax. For an area like ours, that could be a big shift. Until now, our fortunes have depended on Whitehall deciding what we get. In future, part of what we get will depend on what we grow.
Income tax: the real prize
Each MSA will get an initial funding baseline at the next Spending Review. A funding floor, potentially set at 95 per cent of that baseline, would protect against economic shocks. Rolling resets are meant to stop the gaps between regions widening for ever.
The reward comes when locally raised income tax grows faster than the baseline. National changes to rates and thresholds won’t automatically count either way. That matters, because freezing thresholds while wages rise can push receipts up without any local policy having worked.
So the incentive is simple. Get more people into better-paid work in Leicestershire, and the area benefits directly.
Business rates: smaller, but it still counts
By the end of the decade, local government will retain 100 per cent of business rates raised locally. MSAs will receive a 20 per cent share, and councils will keep at least 70 per cent. The final 10 per cent is still to be decided.
Some will say 20 per cent is modest, and in comparison with income tax it is. But it gives a Mayor a reason to care about every new unit on an enterprise zone and every high street that fills back up. Government has also signalled that Mayors may be able to keep that growth for longer than councils.
Money to invest
Good Growth Funds start with £285 million of capital grant in 2027–28. Of that, £165 million is for areas with a Mayor in place in 2027, and £120 million of “incubator capital” is for areas heading towards devolution.
The longer-term ambition is to blend public and private money, drawing on the Local Government Pension Scheme and bodies like the National Wealth Fund and the British Business Bank. The Budget added £20.4 billion of capital to the two, taking their combined capacity to £73.8 billion.
On top of that there’s a new £1.5 billion concessional borrowing facility for MSAs, due by April 2028. It’s aimed at closing viability gaps on housing, high street regeneration and transport. The lending terms are still in development.
The catch
None of this is free money, and I’d be doing you a disservice if I pretended otherwise. The big investors have other demands on them, including defence, energy security and industrial strategy. If we turn up without credible, investable projects, that money will go somewhere else.
Borrowing also means capability. An MSA has to be able to run a loan book, structure deals and say no to bad schemes. That’s a specialist skill set that needs building now, not in 2028.
The question for Leicestershire
We have real assets: our universities, logistics strength, advanced manufacturing, sport and visitor economy, and high streets with real potential. The question is whether we can turn them into a pipeline that investors and government take seriously.
What would you want a Mayor here to do first with a bit more financial freedom? Tell me in the comments.