The Local Growth Fund – Public funding briefing
12th January, 2026
The Local Growth Fund is a major new public funding programme, worth over £475m in each of the next three financial years, which will be used to provide grants towards the delivery of new infrastructure, business support and skills development.
In this article, Ward Hadaway Public Funding Partner, Alexander Rose, provides an overview of what is known about the Local Growth Fund at this stage, including what can be drawn from recent government announcements about how the funding will be allocated.
What is the Local Growth Fund?
The Local Growth Fund is a new grant funding programme that will run from 1 April 2026 and be worth £1.5bn over the next three years. The fund has been established by the Ministry of Housing, Communities and Local Government (MHCLG) around three broad themes – infrastructure investment, business support and skills development. It will be administered by Combined Authorities in England and through the Devolved Administrations in Scotland, Wales and Northern Ireland.
What did we find out in the Spending Review 2025?
On 11 June 2025, the Chancellor of the Exchequer, Rachel Reeves MP delivered the government’s Spending Review for the period starting on 1 April 2026 and ending 31 March 2029.
On the subject of new public funds she announced that “the government is providing targeted, long-term local growth funding to support regional growth across the UK, completing the transition from the UK Shared Prosperity Fund (UKSPF). This includes establishing a new local growth fund, including a 10-year capital settlement from 2026‑27 to 2035‑36, for specific mayoral city regions in the North and Midlands with the highest productivity catch-up and agglomeration potential“.
She went on to explain “in Scotland, Wales and Northern Ireland, the Offices for the Nations will work with the Ministry of Housing, Communities and Local Government to implement the new local growth fund“.
This statement confirmed that the UKSPF (which was originally promoted as a replacement for regional funds from the European Union, such as ERDF) will no longer be available after 31 March 2026. Instead UKSPF will be replaced by two funds, the Pride in Place Programme and the new Local Growth Fund with effect from 1 April 2026
How will the Local Growth Fund apply in England?
The government has decided that the Local Growth Fund will be delivered in areas with an existing Mayoral Strategic Authority and a GDP per head below the UK average. Under this formula, eleven Combined Authorities and Combined County Authorities were eligible, with funding calculated in proportion to their population as follows:
- West Midlands Combined Authority – £143m
- Greater Manchester Combined Authority – £142m
- West Yorkshire Combined Authority – £114m
- East Midlands Combined County Authority £107m
- North East Combined Authority – £95m
- Liverpool City Region Combined Authority – £75m
- South Yorkshire Mayoral Combined Authority – £67m
- Greater Lincolnshire Combined County Authority – £52m
- York and North Yorkshire Combined Authority – £40m
- Tees Valley Combined Authority – £34m
- Hull and East Yorkshire Combined Authority – £29m
In England, the Local Growth Fund is worth £0.9 billion and is calculated across four years (in the Devolved Administrations, the calculation has been made over three financial years).
Each Mayoral Strategic Authority will be entitled to direct their allocation towards the infrastructure investment, business support and skills development in line with their Local Growth Plans.
The Mayoral Strategic Authorities entitled to Integrated Settlements will be held to account through the English Devolution Accountability Framework.
The government will publish an accountability framework for the remaining Mayoral Strategic Authorities in the coming weeks setting out the outcomes, indicators, and targets that must be satisfied in the delivery of the fund.
What is the Local Growth Fund allocation for Scotland?
The Scottish Government has been working with MHCLG to set out a delivery plan for the £140m Local Growth Fund programme that will be delivered in Scotland over the next three years.
The programme will fund regional projects which will drive economic growth and be allocated as follows:
- Glasgow City: £60.9 million
- Edinburgh & South East: £37.8 million
- Tay Cities: £19.5 million
- Ayrshire: £11.8 million
- Forth Valley Region: £9.8 million
How much has Wales been allocated under the Local Growth Fund?
The Welsh allocation for the Local Growth Fund is £547m over 3 years (i.e. just over £182m per year). Awards will be made in line with a delivery plan designed by the Welsh Government with allocations expected to be made for North Wales, Mid Wales, South West Wales, and South East Wales.
A consultation on the delivery of the fund ended in December 2025 and further information is expected to be published in the coming weeks.
What is the Local Growth Fund allocation for Northern Ireland?
On 6 January 2026, MHCLG’s Miatta Fahnbulleh MP announced in Parliament that Northern Ireland will receive £45.5m per year (£136.5m over three years) as Local Growth Funding.
The Northern Irish Local Growth Fund programme will be designed and delivered in partnership with the Northern Ireland Executive, the Northern Ireland Office and the Ministry of Housing, Communities and Local Government.
Northern Ireland’s allocation is higher than in other parts of the UK because it did not receive an allocation under phase 2 of the Pride in Place Programme.
Conclusion
The Local Growth Fund is a significant public funding programme that is expected to be available from 1 April 2026 which offers the potential to bring significant regeneration benefits to many parts of the UK by offering grant funding towards the costs of developing new infrastructure, business support projects and skills programmes. The extent of the regeneration benefits achieved will depend on the quality of the projects brought forward and supported. As such, there will now be a focus upon encouraging good projects to come forward, designing appraisal processes that spot the best regeneration proposals and ensuring that the fund’s outcomes, indicators, and targets are met.
Ward Hadaway is one of the UK’s leading full service law firms providing specialist expertise on a wide range of areas of law that are relevant to the successful delivery of grant funded projects. This includes specialist real estate, commercial and competition law expertise, as well as specialist lawyers that can advise on public procurement, grant funding agreements and subsidy control. Please do get in touch if we can be of assistance.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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