Agenda item 2: Local Growth Fund in Wales consultation

SPC Members are asked to: 

• Note the contents of this paper and encourage your networks to respond to the Local Growth Fund consultation before 19 December.

1. The SPC is asked to note the consultation on the Welsh Government’s Proposals for an approach to the UK Local Growth Fund in Wales.

2. UK local Growth funding of £547million will be made available to the Welsh Government between April 2026 and March 2029. The UK Government will transfer this funding to the Welsh Government annually to deliver a Local Growth Fund to benefit businesses, people and communities across Wales. Our proposed objective for the Local Growth Fund in Wales is to support productivity growth and tackle issues leading to economic inequalities across Wales.
    
3. The funding from the UK Government will be mainly capital funding (circa 70%), a reversal of the majority revenue provided under the Shared Prosperity Fund. Coupled with the increased focus on economic growth this will mean a different mix of investments will be funded and difficult choices are needed on where much more limited revenue funding is targeted. 
    
4. A six-week consultation on proposals for the Local Growth Fund opened on 7 November 2025 and will close on 19 December 2025. Four online consultation events took place in each of the four regions of Wales between 18 and 27 November and the Regional Investment Steering Group met on 20 November. SPC members were notified of the consultation event dates alongside the update on the Industrial Strategy engagement plan. 

5. The four priority areas proposed in the consultation are:

• More productive and competitive businesses: including a focus on tackling barriers to growth for firms and social enterprises, such as exporting or expansion and access to finance, increasing RD&I investment and knowledge exchange, and taking advantage of opportunities in high growth sectors such as AI, cybersecurity, and digital transformation.
• Supporting people into work and increasing skills: including a focus on increasing economic activity, support for in-work progression of under-represented groups, improving skill levels, and support for demand-led skills in high growth and regionally important sectors.
• Green Infrastructure and energy efficiency: including a focus on increasing renewable and low-carbon energy generation, low-carbon transport and digital connectivity where there is added value, and capital investment to tackle fuel poverty and improve energy efficiency in housing.
• Local infrastructure driving regional economies: including a focus on local infrastructure, including heritage, culture and tourism assets.

6. These investment priority areas area aligned to the UK Government’s objectives for the funding to be more focussed on growth. 
    
7. Each investment priority in the consultation comprises a list of strategic objectives which reflect the current needs and opportunities in our economy and labour market, as evidenced in the supporting socio-economic analysis. We are seeking views on which areas should be prioritised to target limited funding, recognising particular constraints on revenue funded activity and the need to maximise the available funding for greater cumulative impact.

8. Strengthening our regions is a key driver of economic growth. Our consultation proposals include the development of regional plans (by the regional leads for the Shared Prosperity Fund in the first year and for the remaining years via the Corporate Joint Committees) to focus on regional needs and opportunities. The first year will therefore be a transition year, using existing SPF capacity and structures in local government, and to allow for capacity and partnership structures to be built in CJCs ready for 2027 onwards.
    
9. The consultation recognises some interventions may be best planned at a national, Wales-wide level, even if the delivery is regional or local. This might be to benefit from economies of scale or take advantage of specific technical expertise not necessarily replicated across all regions. National projects will often be expected to involve local delivery mechanisms. There is no specific allocation for this proposed in the document but views are sought. 
    
10. The financial settlement from the UK Government will mean a different mix of investments to programmes like the Shared Prosperity (SPF). However, there will also be areas of overlap. We are working with local government and other partners to identify existing interventions which add value, don’t duplicate existing or planned provision, and fit with the new focus for the Local Growth Fund to identify priority projects and retain capacity.

11. The consultation will close on Friday 19 December. We ask SPC members to raise awareness of the consultation and encourage respective stakeholders to respond. The consultation feedback we will receive will support us in the development of an investment plan early next year which prioritises productivity growth and reduces economic inequalities for all citizens of Wales.

Equity, Diversity and Inclusion (EDI)

The content of this paper does not raise any specific EDI issues. However, there could potentially be significant consequential impacts on businesses and the workforce as the Investment Plan is developed, agreed, and implemented.