Memorandum of Understanding between the UK government acting through the Secretary of State for Wales and the Secretary of State for Housing, Communities and Local Government and the Welsh Ministers, acting through the Welsh Government

1.1 The Parties to this Memorandum of Understanding (MoU) are:

• the UK government, acting through the Secretary of State for Wales (SoS Wales) and the Secretary of State for Housing, Communities and Local Government (MHCLG Secretary of State)
• the Welsh Ministers, acting through the Welsh Government (“WG”)

1.2 For the purpose of this MoU, each shall be a “Party”, the SoS Wales and MHCLG Secretary of State shall be “UKG Parties” and together “Parties”.

2.1 This MoU sets out the understanding between the Parties regarding funding provided by the Ministry of Housing, Communities and Local Government (MHCLG) to the Welsh Government to deliver the Local Growth Fund (LGF or the Fund) in Wales.

2.2 This MoU is grounded in the jointly agreed principles for intergovernmental relations and sets out the overarching principles for and approach to the use of the Local Growth Fund in Wales.

2.3 This MoU shall take effect from the date it is signed by the Parties and will remain in effect until 31 March 2029 (the “Term”), subject to any earlier termination in accordance with the provisions set out at paragraph 2.5, or extension as set out at paragraph 2.6 permitted below.

2.4 This MoU is not intended to create legal or binding obligations between the Parties, but it sets out a clear set of arrangements between the UK government and the Welsh Government on the use of the fund in Wales.

2.5 Early termination may be considered:

• if the funding specified in section 4 is used by the Welsh Government for priorities clearly outside of the scope of the Wales Investment Plan agreed with the UK government, as outlined in: Local Growth Fund: investment plan. In each financial year of the 3-year funding period, an annual review of the progress against the Investment Plan will be held every 12 months between the Parties. The annual review process will include a progress report to be shared by Welsh Government covering progress, as specified in section 7.

2.6 This MoU may be extended if UK government funding for the Fund in Wales continues beyond 31 March 2029.

3.1 At the June 2025 Spending Review (SR), the UK government announced it would provide targeted, long-term local funding to support regional growth and opportunities across Scotland, Wales and Northern Ireland.

3.2 The UK-wide Local Growth Fund has been developed to deliver on the UK government’s Plan for Change and Economic Growth Mission. The Fund shall be used to support either (or both) of the following high level strategic outcomes:

• Outcome 1: Increased Real Household Disposable Income (RHDI) per head
• Outcome 2: Increased Gross Domestic Product (GDP) per head

3.3 This will be achieved through three interconnected investment themes in the Wales Investment Plan and noted below. These themes read directly across to the themes (noted in brackets) in the policy framework for Scotland, Wales and Northern Ireland:

• More productive and competitive businesses (Support for businesses)
• Increasing skills and supporting people into work (Skills and employment support)
• Improving regional infrastructure (Enabling local growth infrastructure)  

3.4 The agreement between the Welsh and UK Government on the approach to the Local Growth Fund in Wales is set out in a nation-level, 3-year Investment Plan attached at Local Growth Fund: investment plan.

3.5 For transparency, a technical note providing high level details of the Scotland, Wales and Northern Ireland LGF Programme will be published on gov.uk. This will be referred to as the ‘SWNI Local Growth Fund Technical Note.’ The Parties will discuss any updates to the Technical Note prior to publication.

4.1 The UK government will provide Local Growth Fund monies for Wales in accordance with the tables set out at Annex A.

4.2 Funding transferred by Budget Cover Transfer will be confirmed to the Welsh Government annually in accordance with the Supplementary Estimates process and subject to agreement of the Investment Plan for Wales and the annual review process between the Parties.

4.3 Funding is provided to the Welsh Government to meet the costs of implementing the Local Growth Fund Investment Plan for Wales and should only be used for this purpose, with the funding to be spent by 31 March 2029.

4.4 The Investment Plan sets out the agreed financial profile for delivery of the Local Growth Fund in Wales, including allocations at thematic and spatial levels. The Welsh Government will manage in-year expenditure within this profile, as set out in the agreed SWNI LGF Technical Note.

5.1 The Permanent Secretary of MHCLG will hold Accounting Officer (AO) responsibility for the Fund across the UK.

5.2 The Permanent Secretary of the Welsh Government will hold Accounting Officer (AO) responsibility for the Local Growth Fund in Wales by virtue of section 129(6) of the Government of Wales Act (GOWA) 2006. The Permanent Secretary is accountable to Senedd Cymru for the allocation, management and use of the funding within Wales, ensuring expenditure complies with Welsh Government rules and guidance on the use of public money, and delivery of activities within devolved competence.

5.3 Accountability for the use of the funding transfers from MHCLG to the Welsh Government in accordance with this MoU. Following transfer, MHCLG does not retain responsibility for individual spending decisions or delivery arrangements.

5.4 In addition, MHCLG will be responsible for the following:

1. Agreeing the nation-level Investment Plan for Wales.
2. Programme level fund governance to effectively manage the Fund across Scotland, Wales and Northern Ireland.
3. Transferring funding to Wales in accordance with the financial arrangements set out in section 4.
4. Receiving and analysing ongoing monitoring and reporting on the Fund which the Welsh Government will share. This includes sharing 6-monthly progress reports, annual reviews and sharing information to support change requests in accordance with the process set out at section 11.  

5.5 The Wales Office is responsible for the following:

1. Endorsing the nation-level Investment Plan for Wales, prior to MHCLG assessment and agreement.
2. Working alongside the Welsh Government on communications so people in Wales are aware of the impact of the funding made available by the UK government.
3. Participating in the Scotland, Wales and Northern Ireland Programme Board and the Wales advisory board described under section 9.

5.6 The Welsh Government’s responsibilities include:

1. Overall co-ordination, design, and delivery of the Fund in Wales and its performance against objectives which contribute to UK-wide aims.
2. Point of contact and lead for all engagement with stakeholders and partners within Wales on the Welsh Local Growth Fund.
3. Meeting requirements to fulfil audit and scrutiny arrangements, including accountability to Senedd Cymru for the use of this funding.
4. Management of the funding through effective governance.
5. Responding directly to queries on the design and delivery of the Fund in Wales.
6. Providing such information as is reasonably required to UKG Parties to support transparency and accountability in relation to the overall UK-wide programme, including any contentious audit or accountability issues, including suspected or identified cases of fraud.

5.7 The Welsh Government’s Investment Plan will be published on GOV.WALES

6.1 In accordance with the IGR principles of working, all Parties will endeavour to work together to ensure this Fund meets the key aims and objectives as set out in section 3 of this MOU and the agreed Investment Plan.

6.2 Both Welsh and UK government officials will meet regularly throughout the lifetime of the Fund to share information, monitor progress and exchange best practice across the UK.

7.1 The Welsh Government will share information on a 6-monthly basis and participate in informal quarterly discussions with UK government parties. An annual review between the Parties will take place to consider progress, including deliverables, governance and assurance matters, allocations and any specific delivery challenges or opportunities, as set out in the SWNI Local Growth Fund Technical Note.

8.1 Details of payments to the Welsh Government will be confirmed following the annual review between the Parties.

8.2 Funding will be transferred to the Welsh Government annually over three years between April 2026 and March 2029. Payment will be made using budget cover transfers (BCT) at Supplementary Estimates. Payments will be paid according to the schedule set out in Annex A. Amounts being transferred under the BCT must be agreed by the Secretary of State for MHCLG and confirmed to comply with the UK government Estimates timetable.

8.3 The use of any underspends in future years will be based on assurances from the Welsh Government as part of the annual review between the Parties. The UK government may amend the funding allocations as part of this process.

8.4 No funding will be provided for activity after 31 March 2029, unless the condition set out at paragraph 2.6 applies. Expenditure for this Fund must be incurred by the end of the 3-year funding period, 31 March 2029. Any underspend at the end of this funding period will be repaid to the UK government.

9.1 At the Scotland, Wales and Northern Ireland level, an MHCLG-chaired Programme Board will meet to discuss high-level issues and share best practice on the UK-wide fund overall. It will include officials representing the Wales Office and the Welsh Government. Information shared by the Welsh Government will support the work of the Board.

9.2 The Welsh Government will be accountable for the design, delivery, monitoring, evaluation, audit, and coordination of the Fund in Wales. As such the Welsh Government will establish its own programme governance arrangements to support decisions and oversee delivery in Wales.

9.3 A Welsh advisory board of partners will be established, which will include representation from the Welsh and UK government. Both governments will discuss and agree membership and terms of reference, in line with the Welsh Government's implementation of the Fund.

10.1 As Accounting Officer managing the Fund in Wales, the Welsh Government will apply its own governance and assurance arrangements to ensure all legal and other statutory obligations and consents are adhered to. 

11.1 The Welsh Government will notify the UKG Parties of any proposed non-material changes to their Investment Plan in line with the Technical Note agreed between the Parties.

11.2 The Welsh Government will notify the UK government through a change request if a change constitutes a “Material Change” as set out in the SWNI LGF Technical Note. Any changes to the allocation methodology and/or allocations to regions within Wales will be notified as part of regular discussions and/or the annual review process.

11.3 The UK government recognises that not all change will meet the materiality threshold for a change request. However, any novel or contentious changes (as defined in the technical note) between 15% and 30% (the 30% threshold denoting a ‘Material Change’) will require approval by UKG Parties (via the quarterly discussions or annual review).

12.1 Both the Welsh and UK governments will make all reasonable efforts to inform each other, in good time, ahead of any major publicity events and publications on the Fund in Wales.

12.2 Branding requirements and a communications protocol will be developed and agreed by the Parties to ensure citizens are aware of the impact of the funding in Wales.

13.1 The Parties will each comply at all times with their respective obligations under data protection legislation.

13.2 The Parties agree that for the purposes of the data protection legislation the Welsh Government, the Wales Office and the MHCLG are independent controllers.

13.3 Each Party:

1. will be individually and separately responsible for its own compliance, and
2. do not and will not process any personal data as joint controllers

13.4 Each Party shall, with respect to its processing of personal data as independent controller, implement and maintain appropriate technical and organisational measures to ensure a level of security appropriate to that risk, including, as appropriate, the measures referred to in Article 32(1)(a), (b), (c) and (d) of the UK GDPR (General Data Protection Regulations), and the measures shall, at a minimum, comply with the requirements of the Data Protection Legislation, including Article 32 of the UK GDPR.

14.1 The Parties will develop a data sharing agreement to enable aggregated non personal data, including special category data, to be shared between the Parties if either Party - or any contracted evaluation organisation - conducts research, analysis and evaluation of the Fund.

15.1 The Welsh Government will be responsible for developing and managing the monitoring and evaluation arrangements for the Fund in Wales and will share information (e.g. monitoring information and evaluation evidence) with UKG Parties.

15.2 The Welsh Government will participate in any UK government-led evaluation activity, including sharing learning and good practice across the UK.

16.1 The Parties to this MOU are responsible for ensuring they have the necessary systems and appropriate resources in place within their respective organisations to comply fully with the requirements of this MOU.

17.1 The arrangements in this MoU will be kept under review. Amendments to this MOU may only be made upon written agreement between the Parties.

18.1 The Parties are committed to resolving disagreements at the lowest appropriate level possible within existing intergovernmental structures for the Local Growth Fund. If a disagreement cannot be resolved, either party may refer it to the IGR Secretariat as a dispute under the arrangements for dispute avoidance and resolution set out in the Review of Intergovernmental Relations.

19.1 Each Party will provide to the other Party any information in its possession that may be reasonably requested by the other Party, subject to any confidentiality constraints, safeguards, and statutory rules on disclosure. Each Party will notify the other Party before making to any third party any significant disclosures of information under the Freedom of Information Act 2000 in relation to this MoU.