In this blog, Johannes Read has provided a breakdown of what the budget announcement means for the East Midlands.
This blog was produced for Midlands Business Insider.
Devolution in the East Midlands has come a long way in recent years. What started with announcements in 2022 and 2023 of a devolution deal to form the East Midlands Combined County Authority (EMCCA) and Greater Lincolnshire, led to the elections of Claire Ward in 2024 as the inaugural Mayor of the East Midlands and Andrea Jenkyns as the inaugural Mayor of Greater Lincolnshire.
In the 2025 Budget, announcements have further supported devolution in the East Midlands. It is important to note that there is not an even distribution of devolution responsibilities across the country. This has resulted in some more established combined authorities, such as Greater London, Greater Manchester and the West Midlands having more devolved responsibilities. There is currently no devolution deal for Leicestershire. This is reflected in the announcements made in the 2025 Budget.
Key points for the East Midlands from the Budget include:
- £2.0bn allocated to the East Midlands through the Transport for City Regions fund from 2025 – 2032. Notably, Greater Lincolnshire is not included in this funding allocation. This averages out at £291.1 million per year for EMCCA over the next seven years to help:
- Develop integrated transport networks
- Develop infrastructure to help deliver new homes
- Decarbonise transport and promote healthy living and active travel
- The Local Growth Fund allocates £107m to the EMCCA and £52 million to Greater Lincolnshire over the next four years, at an average £26.75 million per year until 2030. This provides East Midlands Combined County Authority with flexible funding to provide investment into three main areas:
- Infrastructure
- Business support
- Skills development
- Team Derby, a partnership of 350 local business “bondholders”, Derby City Council, University of Derby, East Midlands CCA have been praised for its impact attracting £1.23 billion in capital investment to Derby. This supports the Chancellor’s wider call for buying, making and selling more in Britain.
- Great British Railways, the new publicly-owned accountable body for railway infrastructure and passenger services across the country, will be headquartered in Derby. This builds on Derby’s railway heritage as a strategically important node for British transport.
- Derby-based Rolls Royce in June 2025 have won a contract to build three small modular nuclear reactors in a deal worth £2.5 billion, as part of a wider commitment to £16.7 billion in nuclear power projects across the country.
- Whilst the announcements of Great British Railways and Rolls-Royce small modular reactors were made before the Budget, their inclusion in the Budget solidifies the commitments of the government to these projects and the East Midlands.
- English regional mayors to be given powers to tax overnight stays in hotels and holiday lets. The East Midlands has a large potential in raising money from overnight stays. In Lincolnshire, 8 million people stayed overnight in 2024 and in Nottinghamshire, there were another 5.8 million overnight stays in 2024. Overnight stays in Derbyshire stood at 4.4 million and Leicestershire 3.6 million in 2024. The tourism tax could provide another source of revenue for EMCCA and Greater Lincolnshire. However Leicestershire, without a mayoral combined authority, would not be able to access this.
- Reinforced commitment to the Midlands Rail Hub which would help build better connections between Birmingham, Derby, Nottingham, Leicester, Bromsgrove, Nuneaton, Worcester, Hereford and Cardiff.
- To pick up on an omission from the Budget, there was no announcement of an integrated settlement for either the East Midlands or Greater Lincolnshire Combined Authorities. This would have provided Mayors with greater flexibility over funding, but the announcement was reserved for longer-established combined authorities such as Greater Manchester, West Midlands, West Yorkshire, South Yorkshire, Liverpool City Region, the North East, and the Greater London.
Regional impacts of national announcements
Here are some regional impacts of national announcements from the 2025 Budget and what they could mean for East Midlands across Derbyshire, Lincolnshire, Leicestershire and Nottinghamshire.
| Local Effect[1] | |||||
| Budget 2025 Announcement | East Midlands | Derby and Derbyshire | Lincoln and Lincolnshire | Leicester and Leicestershire | Nottingham and Nottinghamshire |
National minimum wage (NWM) for over-21s to rise 4.1% in April 2026 to £12.71/hour.For those aged 18 – 20, NWM will increase to 8.5% to £10.85/hour. Apprenticeships NWM will increase 6.9% to £8/hour.
|
East Midlands: Pay rise for 172,000 people (8.6% of total working age residents. |
Derby: Pay rise for 13,000 residents (10.3% of total working age residents). |
Lincoln: Pay rise for 5,500 people (10.9% of total working age residents).
|
Leicester: Pay rise for 13,700 people (12.6% of total working age residents). |
Nottingham: Pay rise for 14,400 people (11.5% of total working age residents). |
Households on universal or child tax credit can receive payments for a third or subsequent child from April 2026. |
East Midlands: Extra support for 43,440 children in 34,250 households. |
Derby: Extra support for 9,390 children in 2,620 households.
Derbyshire: Extra support for 16,220 children in 4,620 households. |
Lincoln: Extra support for 2,910 children in 810 households.
Lincolnshire: Extra support for 14,930 children in 4,220 households. |
Leicester: Extra support for 15,460 children in 4,300 households.
Leicestershire: Extra support for 12,220 children in 3,510 households. |
Nottingham: Extra support for 13,440 children in 3,760 households.
Nottinghamshire: Extra support for 17,780 children in 5,070 households. |
Regulated rail fares for journeys in England frozen next year for the first time since 1996. |
East Midlands: Frozen fares for up to 32.6 million train journeys within the East Midlands. | Derby: Frozen fares for up to 3.5 million journeys across three stations. |
Lincoln: Frozen fares for up to 2.1 million journeys at one station. |
Leicester: Frozen fares for up to 5.3 million journeys at one station. |
Nottingham: Frozen fares for up to 7.2 million journeys across two stations. |
This blog was written by Hannes Read, Policy and Data Analyst, City-REDI, University of Birmingham.
Disclaimer:
The views expressed in this analysis post are those of the author and not necessarily those of City-REDI or the University of Birmingham.