Communities Secretary Steve Reed has announced a sweeping programme of reforms designed to transfer power from central government to local communities across England. Speaking at the Remaking the State Annual Conference 2026 in London, Mr Reed highlighted the stark economic disparities within the UK, noting that seven out of ten of Northern Europe’s poorest regions are located in England, and the gap between the richest and poorest English regions is among the widest in Europe. He argued that the UK’s highly centralised system is a root cause of these inequalities, referencing Germany's more evenly distributed power and lower regional disparities as a contrasting example.
Mr Reed detailed three core principles underpinning the government's approach. Firstly, 'devolution by default' will see power redistributed from Whitehall to the regions, ensuring decisions are made as close as strategically sensible to the people they impact. Secondly, 'place-based delivery' will integrate services at a local level, drawing on past initiatives like Total Place, with more pooled budgets to meet locally defined priorities. Thirdly, the reforms aim to empower service users, making public services more directly accountable and responsive to the real needs of communities, a shift expected to foster more relational and preventive public service models.
A cornerstone of this transformation is the landmark English Devolution and Community Empowerment Act. This legislation establishes devolution as the default option, granting mayors new powers over critical areas such as transport, planning, housing, and regeneration. The government views this Act as a foundational step, expressing a desire to deepen devolution further, including through fiscal devolution. The rationale is that by allowing local communities to reap the rewards of local success, new incentives for economic growth will be created, moving away from a fragmented grants system towards long-term investment planning.
An initial step towards fiscal devolution is the introduction of an Overnight Visitor Levy, a mechanism already common in Europe and North America. With England attracting over 130 million overnight visits annually, this levy will enable local leaders to generate revenue for local priorities. Furthermore, the 'Right to Request' initiative allows mayors to assume additional powers as their capacity grows. The first round of this initiative concluded in May, resulting in all mayors now having the final say on mass transit projects, including trams, within their respective regions. The government aims for mayors to play an increasingly significant role in public service reform.
These reforms could have a tangible impact on household finances, particularly in areas receiving greater devolved powers. Improved local transport infrastructure, for example, could reduce commuting costs, while better-targeted housing initiatives might lead to more affordable housing options. The redistribution of power aims to foster local economic growth, potentially leading to increased employment opportunities and higher incomes in previously disadvantaged regions. However, the exact financial benefits for individual households will depend on how effectively local authorities utilise their new powers and resources.