England’s devolution agenda is gathering pace, with new regional powers and funding arrangements beginning to reshape how local areas plan growth and deliver services. But a new report from the National Audit Office warns that the next phase – scaling the system nationwide – will test both local capacity and central oversight.
The Ministry of Housing, Communities & Local Government has made “good progress” in delivering its ambitions, particularly through the rollout of Strategic Authorities. These bodies, split between Foundation Strategic Authorities and Mayoral Strategic Authorities, are designed to give regions more control over economic development and public spending.
By June 2026, two Foundation Strategic Authorities and 18 MSAs had been established, putting the government on track to achieve full coverage across England.
This marks a clear shift from the approach set out in the December 2024 English Devolution White Paper, which called on central government to step back from detailed control and allow local leaders greater freedom to make decisions tailored to their areas.
At the heart of the reforms is the introduction of Integrated Settlements, which provide multi-year funding allocations to mayoral authorities. The government has committed £15.9 billion between 2025–26 and 2029–30 under this model.
The NAO finds that these settlements are widely seen as a positive step. They are already enabling local leaders to take a longer-term view and design programmes that better reflect regional priorities. In some cases, authorities are becoming more ambitious – seeking additional powers, responsibilities and funding as confidence in the system grows.
There is also optimism that more flexible funding could deliver stronger value for money over time, by allowing resources to be directed where they are most needed rather than tied to centrally defined programmes.
Despite this progress, the report makes clear that not all authorities are equally equipped to handle the increased responsibilities.
Newer MSAs in particular may struggle to manage large, complex funding programmes without building up experience, systems and skilled workforces. MHCLG has recognised this risk and is beginning to respond, offering more tailored support and funding to build capacity.
However, as more areas join the system, pressure will grow, not only on local bodies but also on central departments tasked with overseeing them.
A key question for the next phase of devolution is how to balance greater local freedom with effective accountability.
MSAs receiving Integrated Settlements are currently monitored through Outcomes Frameworks agreed with central government. While these are intended to track performance, some local leaders say they remain too heavily driven by national priorities and contain too many measures, potentially undermining the flexibility that devolution is meant to deliver.
The NAO also highlights a future risk: as the number of mayoral authorities expands, departments may default to standardised, “template” frameworks to ease administrative pressure. While simpler, this approach could dilute the focus on local needs.
At the same time, strong local scrutiny will be essential. Local Scrutiny Committees are expected to play a central role in holding mayors to account, but their effectiveness will depend on a wider local audit system that has struggled in recent years due to capacity issues and increasing complexity.
The NAO concludes that while the foundations of the devolution programme are sound, its long-term success will depend on how well risks are managed as the system grows.
Gareth Davies, Head of the NAO, said:
“MHCLG has done well so far in implementing its plans to set up Mayoral Strategic Authorities. The Integrated Settlement arrangements give welcome flexibility to dedicate spending where it is needed most.
“MHCLG should now ensure that the system through which Mayoral Strategic Authorities are accountable to central government is proportionate and supported by strengthened local accountability arrangements.”
With the next Spending Review on the horizon, the NAO is urging MHCLG to focus on strengthening local capability, maintaining proportionate oversight, and ensuring that accountability mechanisms evolve alongside the expansion of devolved powers.
For leaders across infrastructure, economic development and public service delivery, particularly in regions tied to major growth plans such as Northern Powerhouse Rail, the findings underline a critical message: devolution is unlocking opportunities, but only those areas that build strong governance and delivery capability will fully realise its benefits.
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