Budget 2026: Your First Homes, data centre covenant, and more highlights
28 October 2026 16:23
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Prime Minister Andy Burnham’s first Budget was not short on announcements and big promises around devolution, business rates, science funding, and development assistance.
“This is a budget for the working people of Britain, for British businesses big and small,” said chancellor John Healey as he introduced the Budget to the House of Commons on Wednesday.
He went on to describe the Budget as “built on fiscal discipline, which matches immediate action today with clear direction for the future.”
Devolution was, as expected, a large factor in Healey’s address. He emphasised that he was taking “radical” steps to provide mayors with the powers they need to make real impact in their communities – including re-committing to former chancellor Rachel Reeves’ promises to give mayors larger shares of business rates and income tax.
He described the moves as “new powers to the people who know their areas best – not sentimentality but supply-side economics.”
His words failed to inspire Conservative Leader Kemi Badenoch, who quipped that this was “a Budget for getting by, not getting on.”
Here are some highlights of the Budget for those working and living in the North and Midlands.
Development and housing
- No more changes to building regulations in this Parliament, except when around safety
- No VAT on land sold for social housing
- Additional £1.5bn for Social and Affordable Housing Programme
- Biodiversity net gain requirements nixed for smaller housing developments on brownfield sites
- First-Time Buyer ISA introduced, with those looking to buy their first home using the current Lifetime ISA having their withdrawal charge reduced to 20% if they buy a house that is above the £450,000 property price cap
- £432m to tackle rough sleeping
- Your First Homes details announced
- Buyers will need to have at least a 2.5% deposit, government to provide 20% equity loan that will be interest-free for five years, and repayment mortgage must be from a participating lender
- Developers to pay 1% fee on the first 100 homes sold through this programme, 3% on the next 150 homes, and 4% on any sold after that
- Developers can register to be part of the programme starting in December, while customers can start applying in February. First properties to be sold in April
Regeneration project funding
- £10m for Stafford market hall
- £15m upgrade for the Leeds College of Building Campus
- £10m for Bury indoor market
- £20m for Littlewoods in Liverpool
- £3m for a tech company incubator in the Don Valley
- £2.5m for M-Sparc in Anglesey
Devolution
- A recommitment to allow mayors to retain 20% of business rates revenue starting in April 2027 and a share of income tax in 2028
- All business rates to be retained locally by the end of the decade
- A recommitment for mayors in Greater Manchester, East Midlands, Hull and East Yorkshire, Liverpool City Region, Tees Valley, West of England, North East, York and North Yorkshire, and Greater London to establish Business Rates Retention Zones where they can retain 100% business rates growth above an agreed baseline
Business rates
- Vape shops and gambling shops will no longer be eligible for business rates relief, with that money used to support hospitality, retail, and leisure operators
- Two-year freeze in business rates for all retail, hospitality, and leisure businesses
- Increase in small business rates relief threshold
Public procurement
- National Procurement Policy Statement to be made in March 2027
- A “UK Supplier” definition will be created in January 2027. This will be used, in Healey’s words, to “identify companies creating genuine wealth, investment and jobs in Britain”
- 3% apprenticeships target for large government infrastructure and construction projects
Energy, technology, and science
- Data centres will be invited to sign a covenant committing to investing in the communities they’re built in and protecting local water supplies. In return, they will receive grid connections and the ability to build onsite energy generation facilities
- Starting in April, 10,000 companies will pay 25% less for electricity, with backdated payments made for this year.
- Scrapping of tax on gas bills to fund hydrogen projects, instead these will be publicly funded
- A co-investment with Rolls-Royce for a £2.5bn programme to develop gas turbine technology for civil and defence aerospace
- More than £500m from Convatec into its Manchester hub. This is supported by Life Sciences Transformation R&D Investment Fund from the government. (Lease deal)
- Kindeva to invest £200m, supported by the Life Sciences Innovative Manufacturing Fund, for respiratory medicine manufacturing at its’ Loughborough location
- Review announced into rail infrastructure costs
- Promise of legislation to be introduced to reduce risk of legal challenges for infrastructure projects
- Commitment to delivering on the findings of the Fingleton Nuclear Regulatory Review
- £500m for AI investment, including establishing an AI Cyber Security Centre of Excellence in Manchester
- £30m for pilot local partnerships on AI adoption for West Yorkshire Combined Authority, South Yorkshire Mayoral Combined Authority, and York and North Yorkshire Combined Authority
- Recommitment for carbon capture usage and storage and hydrogen projects the Teesside, Merseyside, and North Wales clusters
Other notable additions
- Confirmation of £300m for the Leeds Existing Station Programme
- Commitment to start work on A66 dual carriageway project next month
- £100m for local apprenticeship services
- £20.4bn for The National Wealth Fund and British Business Bank
- Promise to fully fund £15bn Defence Investment Plan (had previously been short £4.7bn)
- £7m for Northern Olympics bid
- Raising of Public Works Loan Board’s statutory limit on the total amount of loans from £135bn to £155bn
- A promise to hold the spring international investment summit in Gateshead
