Mainstream Manchesterism

For a decade, Greater Manchester has been the test case for what happens when a city region can direct its own housing money. On Wednesday, a Prime Minister who used to run it and a Chancellor who promised to move money "into every postcode around Britain" will try to take that model national; and the concept of “Manchesterism” will finally get a test run outside of the M60.

The trailed measures are modest in cash terms but significant in design. Mayors and regional leaders will receive an initial £285m of "good growth" funding next year, earmarked for local priorities, including housing, transport and high street regeneration. A further £150m will build strategic authorities' capacity to run larger investment programmes. A new £1.5bn borrowing facility, to be designed with mayors over the next two years, is planned to start in 2028. The strange thing about this concept is it’s almost existing in a “post-privatisation” world, where we know historically centrally funded sectors don’t work, fully privatised sectors become extractive and attract profiteers so they ultimately don’t really work, so what we have left is a hybrid of the two, both sectors working together, a reformed public sector to act more like the private sector; it’s aggressive, but it needs to be in order to tackle a problem of this magnitude.

Now, £285m will not transform English housing supply; what matters is the shift away from Whitehall bidding pots that the Treasury itself has described as fragmented.

Anyone who has worked on a regeneration scheme knows that system costs time, and time kills schemes. Funding rounds open and close on Whitehall's timetable, not the developer's. Bids are written for assessors, not for viability. Sites that work commercially stall because the public-money piece arrives a year late. A mayor with a settled budget, and eventually the power to borrow, can do what Greater Manchester learned to do: back a pipeline rather than a project, and partner with private capital on a timetable that suits the scheme.

That is where private development finance comes in, and the hybridisation of public and private begins. No mayoral authority will fund housing on its balance sheet alone; that’s not what the Manchester model is. The model that works pairs public funds, which take on the riskier or slower parts of a scheme, infrastructure investments, open-ended investments into ongoing national scale projects, filling the gaps to make the world turn, so to speak, with private lenders who bring speed, appraisal discipline and staged drawdown into projects with clear in and out points, defined exits for the capital to be redeployed again and again as required. This suits the private sector, which needs a defined return over a defined horizon. Invest & Fund already works this way through its Homes England Lending Alliance partnership, and further devolution creates more partners for that kind of arrangement, closer to the sites.

The lesson from Greater Manchester is not that public housing funds are risk-free. Concentration, governance and transparency all matter, and regional funds will be scrutinised harder as they grow. But the principle has been tested: when local public money and private development finance pull in the same direction, stalled sites move.

Wednesday's budget coverage will focus on taxes and headline giveaways, and the devolution package may get a paragraph, but for anyone financing housing outside the South East, it may prove the most durable measure in the statement. The Chancellor could pull other levers; the devolution package is one route to more homes. It is not the only one, and the industry has been clear about what else would move the dial. The Treasury has already signalled that preferential borrowing rates for councils building homes will be extended, meaning councils that can borrow cheaply can do more than build their own stock. They can buy homes from private schemes, forward-fund developments and act as anchor purchasers. Each of those strengthens the exit on a privately financed scheme. Planning capacity is another major issue; under-resourced planning departments remain among the biggest causes of delays. The Federation of Master Builders has asked for more local authority capacity and dedicated SME planning officers. Even modest funding here would shorten the time between land purchase and first drawdown. That is where holding costs eat into small developers' margins. None of these options is a silver bullet. Together, they could begin to tackle the constraints SME developers most often face: planning, finance, and exit.

Manchester built the model. Wednesday is the day it gets exported and field-tested: can this model work at scale, or does it have limitations when scaled up? Time will tell, but the concept is well-meaning.

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