UK budget signals broader fiscal devolution for English local governments
English local governments are emerging as the main public-sector beneficiaries of the UK government's Autumn budget and wider fiscal devolution plans. The policy direction points to a gradual shift in revenue and spending responsibility from central government, with further details due later this year and in 2027.
Highlights
- UK government confirms in its Fiscal Devolution Roadmap that strategic local authorities will receive shares of business rates, income tax, and tourism tax receipts from 2028.
- Central government plans to transfer proceeds from all business rates to local governments by the end, replacing central grants with direct revenue streams.
- The structural rebalancing will increase financial autonomy for English local authorities but heighten their exposure to local economic and tax collection volatility.
Revenue-sharing plans and timeline
As reported by S&P Global Ratings, the UK government confirms in its Fiscal Devolution Roadmap that it is committed to expanding the sharing of budget revenue and spending responsibilities with local governments in England.S&P Global Ratings says strategic authorities, a type of local government in England, are expected to receive a share of receipts from business rates, income tax and tourism tax from 2028, replacing grants. The report also says central government plans to transfer proceeds from all business rates to local governments by the end.
The ratings agency notes that more detailed measures are expected later this year and in 2027. It also states that the report does not constitute a rating action.
Implications for local government finance
The planned changes suggest a structural rebalancing of local government funding, giving English authorities a larger direct stake in tax revenues rather than relying on grants from central government.For the public sector, the shift could strengthen financial autonomy at the local level while also increasing exposure to local economic performance and tax collection trends. The measures indicate a tentative but meaningful move toward deeper fiscal devolution in England.
In our earlier article, we looked at Chancellor John Healey’s commitment to sticking with deficit-reduction plans ahead of the October 28 Budget, as the government tried to balance fiscal discipline with support for growth. We also noted the UK’s 0.1% GDP growth in August and the mounting political debate over how far the Budget should go on structural reforms and tax measures.
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