Why delaying devolution risks business confidence, regional equality and economic growth
Written by Dr Ruth Fleet (pictured), senior policy advisor of Greater Birmingham Chambers of Commerce
Introduction
As we start 2026, it has now become clear that local government reorganisation (LGR) will delay 'fast track' devolution by 2 years to 2028 and for areas like Staffordshire it is likely that the wait will be even longer.
Devolution holds the power to deliver more direct autonomy over unlocking regional economic gains and, with business confidence slumping across the UK, national government must quickly and decisively rethink its decision to delay the devolution process.
Delays to devolution
In December 2025 the government confirmed that it would be delaying elections for mayors in new strategic authorities in Greater Essex, Norfolk and Suffolk, Hampshire & the Solent, and Sussex and Brighton.
These elections were supposed to take place in May 2026 but will now be held in May 2028 after the government argued that this was necessary to allow more time for LGR.
The government has also indicated that it will agree to postpone some local elections in 2026 if councils request a delay.
Unsurprisingly, this decision was met with anger and frustration in the affected regions and more widely across the UK, with opposition parties declaring that the delay was “an insult to democracy” and “a clear sign that Labour is running scared of voters”.
As an apolitical organisation, Greater Birmingham Chambers of Commerce (GBCC) holds a unique stake in the devolution discussion.
We are proud to represent a diversity of businesses in the region, both within the West Midlands Combined Authority (WMCA), one of the biggest Mayoral Strategic Authorities (MSA) in England, but also firms in South and East Staffordshire, an area which is set to see the creation of a new strategic authority from May 2027 (although further delays are anticipated).
The GBCC has also been conducting a research project - the Staffordshire Gateway Growth Panel – to develop clear policy recommendations to ensure a successful transition to the new strategic authority in Staffordshire and to support economic growth in the region.
These recommendations are currently under development in partnership with business leaders, existing Combined Authorities, and academics.
As a consequence, the GBCC is in a relatively unique position to recognise the huge benefits to a region that can be brought via devolution, but is also able to anticipate (and, in some cases, already hearing anecdotal evidence of) unintended business outcomes as a consequence of uncertainty around how LGR and devolution will proceed.
MSA success stories
City regions, via MSAs, have proven to be successful at stimulating economic growth.
A Centre for Cities report shows that since 2019 the productivity of big cities outside of London has been outpacing the capital and the rest of the UK as a whole.
Similarly, many UK regions now outperform the rest of Europe for attracting foreign direct investment (FDI) into the region.
EY reported in June 2025 that the West Midlands and the North West were Europe’s joint fourteenth best performing region, attracting more FDI projects than international cities like Istanbul or Berlin.
Adding to this, existing MSAs are arguably more visible nationally and internationally than they might have been historically.
The soft power of Mayors to work closely with government, as well as the political popularity of some of these figures, have given devolved regions a visibility in national discussions and a stage on which to compete for investment and funding internationally.
Due to further devolution of power, including the award of Integrated Settlements in April 2025 (which allow MSAs more strategic control over the money that is given to them by the national government), MSAs have also been able to deliver long-term strategic planning on areas such as skills, housing, transport and infrastructure.
The WMCA’s Growth Plan was developed in conjunction with businesses and other key stakeholders across the region, and is underpinned by a large evidence base that details the strategic plan for where the West Midlands should focus its efforts over the next ten years.
For these reasons, and many others, MSAs are now central to the government’s plans for economic growth.
Successive governments have driven funding through the MSAs, which represent around 41 per cent of the UK population, using them as a vehicle to stimulate growth and revitalise former industrial powerhouses.
Slowing further devolution of power regionally can only hold back local authorities in England outside of MSAs from working strategically towards economic growth.
Regional inequality
While there is a logic to investing in Combined Authorities that are already proving their value, there is also a pressing need to ensure that other areas are not left behind.
Devolution has the potential to deliver more regional equality in a way that previous grants and government packages have failed to do because it allows self-determination for local people on how to best invest in their own communities.
The Autumn Budget 2025 showed the extent to which big-ticket government funding is being channelled through MSAs.
The Chancellor maintained her commitment to the £13 billion of funding already allocated to MSAs for skills, business support and infrastructure projects.
Within this, MSAs will be given further powers and funding to build more housing, to charge a visitor levy on overnight visitor accommodation, support creative growth and additional funding via a Mayoral Revolving Growth Fund, designed to overcome finance barriers, accelerate investment, and unlock development.
In comparison, non-mayoral areas have seen the UK Shared Prosperity Fund (UKSPF) be replaced with £5 billion of “Pride in Place” funding, which will be awarded over the next ten years.
This has proved controversial, as this fund will only be available to the 339 most deprived neighbourhoods in the UK, excluding the majority of regions like Staffordshire and Cornwall from seeking funding.
While this is not a criticism of focusing government funds to the areas that need it most, it is evident that there are significant areas of England that are losing out on very necessary funding, following many years of decline in regional investment.
As an example, three years of UKSPF funding was worth around £2.6 billion across the whole UK between 2022 and 2025, with Tamworth, Lichfield and Cannock Chase receiving over £8.6 million over that period.
Under Pride in Place funding, one specific area of Tamworth will receive funding, with none allocated for the rest of Tamworth, Lichfield or Cannock Chase.
Not only is this a reduction in funding in actual terms, but we are also seeing a generally unequal distribution of funding.
As mentioned above, around 41 per cent of the country currently sits under an MSA and are receiving £13 billion of funding: around £3.70 is spent per person in MSA areas, while those outside of Combined Authorities will receive only £1 of funding.
Businesses are already facing a postcode lottery when it comes to seeking funding from local authorities and the loss of UKSPF looks as though it will cause further divisions between the availability of support for different communities. These regional inequalities can only be exacerbated by further delay to devolved funding via MSAs.
A growing power vacuum
The English Devolution Bill is now passing through the House of Lords and it is anticipated that it will become law in spring or summer 2026.
However, even with the swiftest of timetables, there are unlikely to be any new strategic authorities in power until May 2028 at the earliest.
The government previously created the Devolution Priority Programme, aimed at fast-tracking devolution in six areas with “sensible geographies” with elections in May 2026 but, as mentioned above, these have now been delayed until May 2028.
For local authorities outside of this, it is to be anticipated that the delay will be even longer.
The dual process of LGR and devolution running alongside one another only makes sense if the processes are quick. Merging different functions in local authorities has been touted by the government as a way to improve efficiency and public services, avoid waste, and ensure clear accountability regionally.
However, if devolution is not prioritised, the government risks achieving the opposite of its goal by creating uncertainty around where power lies regionally.
An interesting case study for this is what is happening to planning decisions made by local authorities.
In areas with devolved powers, the government has established a statutory requirement for MSAs to create Spatial Development Strategies (SDS), requiring strategic infrastructure and housing planning at a regional level rather than each local authority making its own decisions.
The benefit should be joined-up thinking, using regional data and priorities to identify housing and infrastructure needs alongside the power to drive through these changes via Mayoral Development Orders (MDOS).
However, what is already becoming apparent is that the transitional period is causing a power vacuum, with local authorities deferring strategic planning decisions or renewal of local policy frameworks.
As Peter Canavan, partner at Carter Jonas, recently commented: “For housing associations and local government leaders alike, any delay caused by devolution risks compounding these pressures.
“For investors, it threatens to undermine confidence at a moment when long-term capital is urgently needed. And for planners, it raises the spectre of yet another reform cycle that slows rather than accelerates delivery”.
Businesses are already reporting these kinds of issues to the GBCC, with delays and a gap in accountability leading to loss of revenue and issues with business confidence for investment.
On the other hand, the GBBC’s Staffordshire Gateway Growth Panel research into devolution has also highlighted how effectively MSAs are able to manage these issues, particularly since the introduction of the Integrated Settlement.
We believe that the changes via devolution have great potential, but they need to be carried out swiftly and with conviction to allow local authorities the ability to plan and transition effectively.
Policy recommendations
Business is the backbone of the British economy and is an essential partner for the government, local authorities, and new and existing strategic authorities to ensure a successful transition of power.
Successful devolution of power has proven to enable economic growth, while delay and indecision can only harm business confidence and damage regional equality.
To deliver this, the GBCC makes the following recommendations to the UK government and existing local authorities undergoing LGR and transition to a strategic authority:
1 The UK government should reverse its decision to delay its Devolution Priority Programme and commit unequivocally to the timetables already set out for regions outside of that.
2 Local authorities must form key stakeholders fora with regular meetings for communications and strategic input on the development of a future strategic authority to give businesses the information and confidence they need to continue growing.
Devolution is a once-in-a-generation opportunity to address regional equality and accountability, and the government needs to deliver this change for its citizens.