John Healey's first budget will put regional growth at its centre, with the devolution package for England's mayors and local leaders due in his statement on Wednesday.

What the devolution package contains

The core of the package is a new £1.5bn borrowing facility, which is to be drawn up in collaboration with mayors over the next two years. Regional mayors have long argued that their limited borrowing power holds them back compared with local authorities in the US and some European countries that issue their own bonds.

Alongside it, the budget includes:

• •an initial £285m 'good growth' funding allocation next year, to be spent on local leaders' priorities such as housing, transport links or high street regeneration
• •£150m of support to help local authorities scale up and build expertise, amid Treasury concerns about their capacity to administer large budgets

The path to 2028

The 'good growth' money is designed to carry local authorities through to 2028, when a new system comes into force under which some income tax revenue will be handed directly to their areas. That handover was an idea first mooted by Healey's predecessor, Rachel Reeves, earlier this year.

Under the plans, local leaders are expected to be allowed to keep some of the additional revenues created by a stronger local economy. More details of the scheme will be announced at the budget itself.

Mayors' reaction and the backdrop

Andy Burnham said the plans would mean local leaders no longer need Treasury approval for each individual project.

Healey's argument, as the chancellor presents it, is that those closest to their communities are best placed to decide how money is spent there, so they are receiving additional funds, powers and staffing to start projects and build homes.

The package was drawn up with input from No 10 North, which has been holding a weekly "situation room" meeting with local leaders on barriers to economic growth. The Treasury also announced changes this week to the 'green book', the guidance on which projects taxpayers should fund, so that combined growth-boosting projects - a housing and a transport scheme, for example - can be considered together.

What else is in the budget

Beyond the devolution package, the budget is expected to include support for poorer households hit by rising energy costs, and modest tax rises, including on banks. Healey has repeatedly said he wants to offer a "breathing space" to households and businesses that have struggled as the war in the Middle East has driven up bills.

The chancellor will also set out how he plans to fully fund the four-year defence investment plan announced in the dying days of Keir Starmer's premiership. He is not expected to say when the UK will commit to spending 3% of GDP on defence, with that decision likely delayed until a spending review next year.

After the budget, the government will publish a white paper on "rewiring the state", setting out how the civil service will be reshaped as powers pass from Whitehall. More details of the revenue retention scheme are due at Wednesday's statement, with the white paper to follow it.