Andy Burnham’s first week as Prime Minister provided an early indication of how his Government intends to work with local government. Many of the headline announcements focused on cost-of-living measures such as business rates relief on pubs, clubs and live music venues and introducing a £2 single bus fare cap, but the most significant development for local authorities in his first week came late on Thursday with the Prime Minister’s announcement that Metro Mayors will have a leading role in the UK’s economic policy.

The Prime Minister chaired the first meeting of a revived National Economic Council with the nation’s regional mayors at the new No 10 North at Heron House on Friday. This move aligned with a wider theme running through the new administration of the importance of devolution and a larger role for local and regional leaders in delivering on national priorities.

This insight outlines the developments from the Andy Burnham Government so far and what they could mean for local authorities.

‘No 10 North’ and devolution strategy

One of the first major acts of his Government was the announcement to establish No 10 North, which will be the “engine room of devolution and good growth in every postcode”. No 10 North is an important hub in Manchester, created as a result of the new Office for the Prime Minister and the Cabinet (OPMC). It will receive targeted transfers of overarching strategic functions, including local economic growth and devolution strategy from the Ministry of Housing, Communities and Local Government (MHCLG). Local economic growth policy from HM Treasury will be transferred directly to No 10 North.

Louise Haigh, now the First Secretary of State, will lead the OPMC and will oversee teams responsible for local growth and devolution. Angela Rayner, now the Secretary of State for MHCLG, will retain devolution policy, with only strategy functions transferred.

A written ministerial statement from the leader of the House of Lords, Baroness Angela Smith, said: “…we are fundamentally rewiring the state, changing the geography of government to deliver a stronger, more strategic centre that empowers local leaders, and acts as the engine room for driving economic growth across the whole country.” She called the newly created body “the engine room of devolution and good growth in every postcode, across government and the wider economy”.

In a later statement from Government, No 10 North (which is based in Heron House) was described as “the Government’s new situation room for growth. It brings the levers of local economic growth and devolution together under one roof for the first time.” It added that the Prime Minister is expected to work from No 10 North each week, as well as other ministers.

The decision to relocate some civil service functions away from Whitehall and Westminster reinforces Andy Burnham’s long-standing argument that decision-making should be closer to the local communities who are affected by those decisions.

Metro Mayors to play key roles

On Thursday 24 July, the Prime Minister announced he would chair the first meeting of the revived National Economic Council (NEC) at No 10 North. First established in 2008 to provide a national response to an economic emergency, the NEC brings together senior ministers and Metro Mayors. A statement from Government said the NEC’s attendees will “flex” depending on the issues under consideration, “bringing together business leaders, trade unions and other partners where their expertise can help drive delivery”.

In his statement, the Prime Minister said the move was “about taking power down and placing it in the hands of people who can use it best”. He added: “Through this forum, we will ensure every department in Whitehall gets behind the growth and devolution ambitions of every region.”

For local authorities, this is a clear sign that his Government intends to strengthen the role of regions in shaping economic policy. Metro Mayors and officials within Strategic Mayoral Authorities will be expected to take leading roles in regeneration plans within their regions. Councils and combined authorities with strong growth plans, regeneration programmes and established partnerships will have greater opportunities to influence policy discussions than has traditionally been the case under more centralised models of government.

The same themes featured heavily in his People’s History Museum speech on 29 June, several weeks before he took office as Prime Minister. He committed to a new wave of devolution, including additional responsibilities and funding for strategic authorities, and made clear that local leaders should have greater freedom to develop place-based solutions to local challenges. This included pledges to strengthen partnerships between local government and industry by “consolidat[ing] public and private investment at a place-based level and help all areas establish good growth funds”.

In practice, this means that Mayors, supported by officials within Mayoral Strategic Authorities and Councils, could have access to more public funds to implement their regeneration plans through disciplined delivery. If more public funds are available, then Mayoral Strategic Authorities could also be subject to a more extensive audit process.

Cost-of-living measures

Following pledges to help with the cost of living in his first speech as Prime Minister, Andy Burnham made several announcements which will affect local authorities and how they operate.

First, he announced that VAT on household electricity bills will be cut from 5% to 0% from 1 October 2026. Councils who currently have rent arrangements where they pay electricity bills on behalf of tenants could see lower utility costs. The VAT reduction will be applied automatically by energy suppliers, which means that landlords paying electricity bills could see a small reduction in their monthly costs from October.

On his second day in office, the Prime Minister announced that a £2 cap on bus fares in England would be reinstated from January and be in effect throughout 2027. The nationwide cap is currently set at £3 until the end of March although some areas such as Manchester and Liverpool already operate a £2 cap scheme. Government said the scheme would cost more than £500m which would be found from “re-prioritising government funds”.

Thirdly, the Prime Minister announced that pubs, clubs and live music venues in England will receive a 20% discount on their business rates. The measure builds on the 15% business rates relief for pubs and live music venues announced earlier this year and will apply to almost 32,000 hospitality venues.

‘British-backed procurement’

Another significant theme from the Prime Minister’s first speech was his commitment to “re-industrialising Britain” and using public procurement to support British industry.

Although no proposals have yet been published, the Prime Minister’s comments suggest a stronger emphasis on using procurement as a strategic tool to support local economies, drive regeneration and encourage investment in specific sectors and places.

For local authorities, this aligns with a wider trend towards social value and the use of public spending to generate wider economic benefits. Councils will be watching closely for any changes to procurement guidance or policy that may influence how authorities approach commissioning and contract management.

Looking forward: what are the immediate priorities for local authorities?

The Prime Minister announced in his first speech that he will bring forward a new 10-year plan for Britain later this year. In a statement, he said this plan “will set out how we bring the essentials in life back under stronger public control to make them affordable again; how we reindustrialise every part of Britain; and how we build more council homes and solve the housing crisis”.

For many local authorities that are part of the current Local Government Reorganisation, the focus remains on LGR – particularly in the 14 areas who have received decisions on their proposals on 16 July 2026. For the current councils undergoing LGR, shadow elections are expected to be held in May 2027 and the existing authorities will cease to exist on 1 April 2028. Find out more information in our previous insight on this topic.

How Capsticks can help

To discuss anything relating to the contents of this insight or the impact of devolution or the new Government on your organisation, contact our Head of Local Government Tiffany Cloynes, Legal Director Rebecca Gilbert or Principal Associate Megan Tam to find out more about how Capsticks can help.