On the cusp of a big change moment in sub-national economic development…LEDC's big takeaways from Spending Review 2025

The scale and scope of the Spending Review 2025 (SR25) for LED and placemaking alone justifies at least a ‘double espresso’ shot and a full blog. Even then, we can hardly do it justice. It has the potential to be a major change moment in how sub-national economic development is delivered. But realising that potential requires a huge amount of work from both decision makers and professionals in our areas of work. These are five of the key takeaways we believe SR25 surfaces on how to land the big announcements in Greater London and England’s Mayoral Combined Authorities, and what this might mean for the devolved nations and the rest of England.

Spending Review 2025 might deliver the UK long-term model for place-sensitive strategy, delivery management and resourcing – but it needs a lot of further work

Much of the episode considers the progress on integrated settlements – to cover Greater London, and six ‘established’ MCAs from 2026/27, founded on statutory Local Growth Plans (LGPs), a ten-year local growth fund (LGF), with agreed outcomes and accountability frameworks.

LEDC is strongly supportive of this direction of travel. It will require a lot of hard work and detailed negotiation to get the seven settlements agreed and delivered from 2026/27. If this is to become the conceptual model, we would like to see over the coming months:

• Clarification of the degrees of flexibility and variation from national asks that will be permitted in the settlements. Looking back to the days of RDA single pots, this never inhibited Government Departments and national agencies demanding micro-accountability for amounts they supposedly contributed to regional settlements. The precision with which City Region Transport Settlements were announced implies levels of departmental and agency intrusion that might deconstruct the single settlement’s integration potential.

• Some discussion on the long-term basis of fiscal transfers – perhaps in association with the devolved nations. In short, are there alternatives to the Barnett formula and an MCA Barnett-light-type mechanism for determining devolution settlements?

• An open, evidence-informed discussion about what has been learnt from the 2025/26 Greater Manchester and West Midlands single settlements processes and outcomes. If this mechanism is to become the general model, lets work on getting it as fit-for-purpose as possible.

  
  

• Mayors being bold about variations, leverage from other resources (including their own financing options), influence on the new big-ticket function on the table – health, wellbeing and public services reform – and identifying real synergies they can deliver from single settlements beyond department-by-department bilateralism.

This direction of travel gives both devolved nations and non-MCA areas in England major challenges

The England areas outside London and the ‘established’ (by Government’s definition) MCAs have already expressed concern that their absence from the new system means that they have to continue to deal with investment financing in a piecemeal and short term way (notwithstanding their existing devolution agreements), and that they may receive less pro rata than those areas with a single settlement. At one level, at least there is the devolution framework which potentially allows them to graduate up the ladder of enhanced devolution as their institutional maturity and appetite for reform evolves.

On a different level altogether, the application of the model needs to be tailored in England for non-metropolitan geographies, and in Scotland, Wales and Northern Ireland, for the devolved nations and their very different pattern of cities and regions.

One suspects that delivery of major investments will be as demanding in non-MCA geographies and in the MCAs, and this will be a key signifier of preparedness to move to long-term LGP-led processes. So, perhaps the non-MCA areas in England and the devolved nations should consider almost a shadow-MCA model of planning and management in advance of them formally being graduated into the system.

Government can go further on the simplification agendas – especially for communities and neighbourhoods

The demise of UKSPF is unlikely to be lamented. The chunky announcements for instruments like National Wealth Fund (£27.8bn), and programmes like Affordable Homes (£39bn), R&D (£22.6bn pa), Transport for City Regions (£15.6bn) suggest a focus on a smaller number of larger funding streams. This is to be welcomed. But one major exception appears to be communities and neighbourhoods. The 75-community Plan for Neighbourhoods of March 2025 has been supplemented by a SR25-announcement of 25 Trailblazers (some of them new), support for up to 350 priority communities accompanied by a new £240m ‘Growth Mission Fund’ for (among others) ‘forgotten’ growth projects, and major community health reforms and housing investments.

LEDC has increasingly championed the importance of hyperlocal community and neighbourhood regeneration and building the social infrastructure to give communities agency in the changes that affect them. The idea that Whitehall is best placed to agree and oversee this plethora of schemes is misplaced. Although they have enough on their plates with integrated settlements and the large investment programmes mentioned above, MCAs and partners, including their constituent local authorities, should give some thought to the case for devolution of community regeneration programmes and their implications for genuinely place-based local empowerment.

The reforms of the Green Book are potentially helpful, but probably not as much a gamechanger in addressing regional disparities as has sometimes been asserted

The Green Book has often been accused of favouring investments in London and the South East. We see the Green Book as a set of tools and frameworks for investment appraisal and management which is, in practice, never the whole story in what projects are funded and which are rejected. Nevertheless, the announcement of reforms to be operationalised in 2026 are to be welcomed. They include:

• Place-based business cases:  to assesses the complementarities between different projects, such as housing and transport.

  
  

• Simplification and shortening of the GB and accompanying business case guides with an updated version to be published at the start of 2026.

  
  

• Less emphasis on Benefit-Cost Ratios (BCRs) in government appraisal: banning the use of arbitrary BCR thresholds as a means of determining if a project should be funded.

As the Green Book evolves, factors that have been developed for issues like inclusion, social and public value, and natural capital should be increasingly assimilated. But the Green Book should be a menu for better investment appraisal and management – not a straitjacket.

SR25 is a significant milestone for LED and placemaking, but there is still a lot to come

Beyond the ‘devil is in the detail’ commentary above, we still await the National Infrastructure Strategy, the National Industrial Strategy, the national department and agency translation of SR25 ambitions into policy and practice, the responses of the devolved nation governments, and much more. As Henry Kippin said from the front-line of the North East Combined Authority (NECA) in the episode we did with him, ‘Day One’ is not the end point of any journey. The potential of a new SR25 sub-national system will look very different by the time it is brought to fruition in the second half of this decade. And all of us in LED and placemaking need to be part of the process for delivering the destinations of enhanced devolution. 

Concluding remarks

In the round, LEDC is positive about SR25. We see it as putting in place further major foundations for the reforms of sub-national development. The impending National Industrial and Infrastructure Strategies will go further, presumably around the first anniversary of the Labour Government.

These strategic foundations are not negligible. But almost everything will now rest on delivery. A lot of the heavy lifting for that will be done sub-nationally,

The transformation of MCAs (and the creation of new ones), local authorities and local partners into large investors after years of austerity is far from assured. All Government’s SR25 announcements stressed productivity and value for money improvements and digital/AI reforms.

It is an exciting if intimidating set of agendas. What do you think? How can LEDC help you with your roles in these journeys? Do send us feedback and suggestions for future episodes. We look forward to hearing from you and keeping the conversation going…

Further reading

SR25 core documents

• SR25 Main document 

• On integrated settlements for MCAs

• Neighbourhood announcements

• UKRI announcements on place-based innovation funding

• On the latest stage of Green Book reforms

• The always useful House of Commons Library summary of SR25

  
  

Relevant LEDC episodes worth revisiting

• Henry Kippin Guest episode – giving a NECA MCA perspective.

• Plan for neighbourhoods espresso shot – a forerunner of our SR25 critique on central neighbourhood funding programmes.

• Kersten England Guest episode – on what is really needed for hyperlocal social and economic development.

• And, from the vaults…this 2022 episode with Sandra Rothwell on the challenges of multiple funding programmes for LED and placemaking