North East digital sector primed to benefit from new Local Growth Fund grants
25th November, 2025
The budget will be unveiled on 26 November 2025 and is expected to include a series of announcements relating to public funding.
One almost certainty (because it was included in the Spending Review in June) is that the government will launch a new Local Growth Fund in England with effect from 1 April 2026 providing grant funding towards “specific mayoral city regions in the North and Midlands with the highest productivity catch-up and agglomeration potential“. This fund seems perfectly positioned to provide a boost to the high growth potential businesses within the North East’s digital sector. In this article Anna Thorp looks into the impact this fund could have on the prospects of this growing sector.
The North East’s growing digital sector
The North East has a proud history and a bright future in digital technologies.
It was the location of the world’s first business-to-consumer internet transaction – when in May 1984, 72-year-old Jane Snowball picked up her TV remote in Gateshead and used it to order margarine, cornflakes, and eggs from her local Tesco.
Fast-forward to the present day, and the North East of England is once again at the forefront of the digital sector. A new AI Growth Zone for the North East is set to unlock more than 5,000 new jobs in the years to come and bring in £30 billion in investment – including data centres at Cobalt Park in Wallsend and the upcoming Cambois Data Centre Campus in Blyth backed with investment from Open AI, Blackstone and Nvidia.
The region plays host to a number of well-known innovative tech companies and organisations supported by Dynamo, a not-for-profit tech sector business membership organisation committed to stimulating rapid growth in the digital sector through collaboration and idea-sharing.
Dynamo’s extensive contribution to AI and tech in the North East includes launching the TechNExt festival to showcase local tech businesses, spearheading the Catalysing Innovation programme to support the development of tech clusters in the region, and helping to secure a £30 million grant for the Newcastle National Innovation Centre to assist organisations to harness data and AI to support their operations.
The Government’s AI initiatives
The government is eager to back the development of the sector through public funded initiatives. In January, the Government launched the AI Opportunities Action Plan with the aim of shaping the global AI revolution rather than following the lead of others such as the USA and China.
This was followed by the June spending review, which announced over £2 billion of funding to drive the AI Action Plan, and the recent policy paper “Delivering AI Growth Zones” which discusses the introduction of AI Growth Zones to create locations where investment in AI can happen quickly and confidently. The designation of tech and AI as priority industries is also helpful as this focusses attention and can assist in giving private sector businesses the assurance to announce investments.
How will the new Local Growth Fund assist digital businesses?
Ahead of the budget, what we know about the new Local Growth Fund is that it will be controlled by Metro Mayors in the North and Midlands, be provided in the form of grants and eligible businesses will be those in the sectors with the highest growth potential. That appears to position the North East digital sector in line to receive much needed financial support to expand and diversify. It also means that the sector is well positioned to shape the fund to meet its objectives.
The digital sector in the North East of England has great growth potential. The new Local Growth Fund looks set to support such growth and those involved will be watching the budget to find out additional detail as to how this grant funding programme will operate.
If you have any questions in regard to public funding, please get in touch.
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