Devolution, Regeneration & Transport

What was announced 

Andy Burnham has called devolution ‘the thread that runsthrough the Budget’, putting taxpayers’ money where his mouth is and committing to new spending deals for mayors across England. The government’s message was that local leaders should not have to “come cap in hand to Whitehall” to build infrastructure such as a new tram or concert hall. Good Growth Funds for mayors, alternative funding for areas without mayors and £1.5bn in loans for devolved mayoral authorities are intended to give local leaders more capacityto deliver projects. Examples highlighted included metro schemes, urban regeneration and the reopening of Doncaster Airport. 

The Budget also sets out a roadmap towards greater fiscal devolution. Local authorities are due to retain 20% of business rates next year, rising to 100% by the end of the decade, while mayors will receive a share of income tax receipts from 2028. Powers to charge an overnight visitor levy will also be devolved. These changes could give areas a stronger financial incentive to support development and retain more of the benefits of local economic growth. For energy projects, such as solar farms, greater localretention of business rates could be a significant benefit to host areas. 

Burnham has said mayors will be given more control over transport, skills and housing, alongside a share of the income tax raised in their area. More powers could drive development in cities, particularly around transport and housing, while previous announcements have set out how mayors maybe able to ‘call in’ planning applications and keep a greater share of local wealth generation. Burnham has supported mayors developing light rail systems and improving suburban railway networks, so early-stage plans could progress if mayors have the money and powers to deliver them. However, major schemes are still likely to depend on funding and decisions beyond regional level. 

Beyond cities, an extra £6.6bn for the devolved nations hasbeen announced, split £3.4bn for Scotland, £1.7bn for Wales and £1.5bn for Northern Ireland. 

What it means 

On infrastructure, the more significant change is theattempt to give mayors and local leaders more resources and financial autonomy. Good Growth Funds, devolved loans and the planned retention of business ratescould help regions progress transport, regeneration and other infrastructure projects.  

For housing developers this could be a positive story.Increased regeneration could make areas more investable, and councils couldbecome more likely to support housebuilding if they get to keep a greater share of income tax for those living in their areas. The new National Planning Policy Framework also unlocks land around railway stations and tram stops for a “default yes” to dense housebuilding, so if mayors are able to progress with their goals for new tram lines or improvement of local rail services then there will be significant opportunities. Areas without mayors are also intended to receive alternative funding.

Despite this, major challenges remain for the sectors, including the time and costs of the planning process, construction costs and entrenched local opposition to new projects in some areas.

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Energy 

What was announced 

For consumers, Healey favoured targeted short-term assistance with households facing a difficult winter, but the wider message was about a ‘new course for energy’, with lower bills the priority and clean power keyto this. The government reiterated that it is “unshakably committed” to NetZero by 2050 and pointed to progress over the past two years as a basis for bringing UK energy costs closer to European levels. A cost-control framework is intended to put downward pressure on bills. The government’s stated approach is that it will only buy or build clean-power projects where they can help reduce bills and have a grid connection.

A new Norway-style £2bn Energy Wealth Fund had already been announced ahead of the Budget. It is intended to channel tax revenues from North Sea oil and gas production into renewable and low-carbon energy, while addressing some of the criticism around approval of the Jackdaw gas field. 

The government also announced that the hydrogen projects levy will be scrapped, with support for hydrogen projects instead provided directly by government. On the grid, GB Grid is intended to deliver cheaper and faster connections, alongside reforms to the complex systems governing grid access.

What it means 

For the renewable energy sector, there will be relief that the government has maintained its position that renewable sources are central to the future of UK energy. Fixed-price contracts, direct government support for hydrogen, a new cost-control framework and faster grid connections could shape the commercial environment for clean-energy projects, making projects more viable. 

Healey focused on grid connections, signalling that energy projects coming forward without an agreed grid connection could lose government support. The grid is already a major constraint for the renewables sector, so this policy could make things more difficult.

The Energy Wealth Fund could provide support for renewable and low-carbon investment, but its eventual impact will depend on how the fund is structured and spent. 

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Housing 

What was announced 

The Budget allocates £5bn to housebuilding, including £1bn for social and affordable housing, adding to the existing £39bn 10-year Social and Affordable Homes Programme. The aim is to support up to 10,000 additional homes. The government has also set out a £40bn commitment for council housing, alongside extending preferential borrowing rates to local authorities and housing associations to fund council homes. Land sold to social housing providers will be exempt from VAT, another measure intended to support delivery. 

These measures suggest a renewed emphasis on social housing and on local authorities building homes directly. The government also plans to replace the Lifetime ISA with a first-time buyer ISA and reiterated details on its previously announced a new scheme for first-time buyers, branded ‘YourFirst Home’. 

The Budget includes £330m to help end rough sleeping, with a commitment to provide support every winter, building on the government’s ambition to ensure rough sleepers have a bed. It also confirms that building regulations will be maintained during this parliament, while removing biodiversity requirements on brownfield land. The effect of the latter will depend on how the policy is implemented and how it interacts with other planning and environmental requirements. 

What it means 

The Budget’s biggest commitments are directed towards social and affordable housing and council-led delivery. Additional funding, preferential borrowing and VAT changes could support new homes, but challenges remain around securing planning permission, land availability and delivery capacity. The sector will welcome a promise to not change housing regulations in this parliament, apart from for critical safety issues, as well as relaxations to rules around biodiversity net gain rules on brownfield sites.

Data centres 

What was announced 

The Budget set out a 'new deal’ for data centres,recognising their importance to maintaining secure data for Britain’s critical services, including the NHS and the armed forces. A new Data Centre Covenant will establish expectations for investment in local communities and jobs, while protecting water supplies. In return, compliant data-centre projects will have a clearer route to the grid connections they need and may build on-site generation while waiting for those connections. The policy seeks to balance growing demand for digital infrastructure with pressure on local resources and electricity networks. 

What it means 

The data centre deal offers developers a clearer route to grid connections and the option of temporary on-site generation, but these benefits come with conditions. Operators will be expected to invest in local communities, create jobs and protect water supplies. Meeting these requirements could mean additional investment beyond existing plans, while projects that cannot meet them could face delays or struggle to progress.

The announcement can be seen as a strategic move by the government, signalling to the industry that it supports AI development, but also to the general public that it takes concerns around data centre development seriously – which has become an increasingly salient issue in recent months.