Local Growth Fund: guidance

This guidance explains how the Local Growth Fund (LGF) will operate in practice in Wales, covering all three years of the LGF. It should be read alongside the Local Growth Fund Investment Plan for Wales, which sets out the LGF’s strategic framework, priorities and objectives.

This document is intended for:

1. Members of the public and stakeholders, who may wish to focus on:

• Introduction
• What is the Local Growth Fund?
• Targeting Welsh priorities
• Fund structure and delivery model

2. Delivery partners, who may wish to focus on:

• Fund structure and delivery model
• Eligibility
• Funding and payments
• Application and assessment process
• Monitoring, reporting, review and evaluation
• Assurance and compliance

The Local Growth Fund (LGF) in Wales is designed as a regional development investment programme to support productivity growth in areas with catch-up potential and address economic inequality in areas of deprivation. In doing so, it contributes to the Welsh Government’s economic mission to strengthen productivity, raise living standards and support more balanced growth across Wales, including directly contributing to the Welsh Government’s national productivity goal to halve the productivity gap with the rest of the UK within ten years. It can achieve this by supporting business growth, the creation of better‑paid jobs and the strengthening of regional economies. There will be a clear expectation for regional plans, regional portfolios and individual investments to be able to demonstrate a contribution to the national productivity goal. At the same time the LGF will contribute to the complementary aims in the UK Government’s Plan for Change to increase Real Household Disposable Income (RHDI) per head and Gross Domestic Product (GDP) per head. 

The LGF is being delivered through a phased transition. In 2026–27, planning and oversight of delivery is led by regional lead local authorities, drawing on experience and capacity developed through administration of the UK Shared Prosperity Fund between 2022 and 2026. The lead local authorities for each region are Rhondda Cynon Taf County Borough Council (South-East Wales), Swansea Council (South-West Wales), Ceredigion County Council (Mid Wales) and Cyngor Gwynedd (North Wales).

During 2027–29 (and thereafter subject to any extension), responsibility for planning and oversight of delivery will transfer to Corporate Joint Committees (CJCs), who will lead regional planning, prioritisation, and portfolio selection. The CJCs will be accountable for LGF delivery in their region, targeting funding, building coherent portfolios of projects, joining-up investments across the region, and collaborating with other regions on cross-regional investments. CJCs are democratically accountable statutory governance bodies that enable local authorities and partners to collaborate formally at a regional scale on strategic functions best planned and delivered across council boundaries. The LGF has been designed across the UK and within Wales as a regional programme, requiring this strategic approach. 

The purpose of this guidance is to support regional bodies by setting out the objectives of the LGF, the expectations placed on delivery partners, and the principles that guide investment decisions, governance and delivery. It provides a framework for planning, delivery and accountability, aligned with Welsh Government priorities and statutory duties, while enabling regions to target investment where it can have the greatest impact on productivity, pay and opportunity. Additional supplementary guidance may be provided in the future. 

What is the Local Growth Fund (LGF)?

The LGF is a £546.5 million investment programme supporting productivity growth and tackling economic inequalities across Wales between 2026 and 2029. It plays a key role in supporting a stronger, more productive and more inclusive Welsh economy.

What does it fund?

The LGF supports investment in:

• more productive and competitive businesses, including targeted investment in high growth start-ups, growing businesses, and research, development and innovation (RD&I);
• skills and support to help people into work, focusing on demand-led skills, progression opportunities and tackling economic inactivity;
• regional infrastructure, including transport, energy and strategic sites & premises enabling business growth and supporting regional opportunity.

Who decides how funding is used?

Funding is allocated as set out in the Investment Plan published by the Welsh Government ensuring alignment with national priorities and the wider economic mission. During 2026–27, planning and delivery of the fund is overseen by lead local authorities for each region (matching the CJC footprint). From 2027 onwards, CJCs will lead regional planning and investment decisions ensuring funding is targeted in line with regional strengths, opportunities and need.

How does it benefit Wales?

The LGF aims to support better jobs, stronger regional economies and more inclusive growth, contributing to higher productivity, improved pay and greater economic opportunity across Wales. It aligns with other regional investments, Welsh Government priorities, and long‑term economic needs.

The LGF brings together capital and revenue funding to address long‑standing productivity gaps across Wales and to enable businesses to scale, innovate and compete effectively. It supports a portfolio‑based approach to investment, enabling regions to combine infrastructure, business support and skills activity in a coordinated and evidence‑led way.

The LGF operates as part of a wider regional investment system, complementing existing Welsh Government and UK Government programmes and supporting alignment between local, regional and national economic objectives. It provides a consistent framework for regional investment planning, with a focus on clear outcomes and proportionate monitoring and evaluation arrangements across Wales.

The LGF targets Welsh priorities by aligning regional economic action with national priorities and local need.

Productivity growth

The socio-economic analysis published alongside the Investment Plan identified persistent and deep‑rooted productivity challenges as one of Wales’s most significant economic constraints. The LGF targets investment towards activities that raise productivity, support business growth and improve access to skills and employment. It focuses on outcomes such as better jobs, stronger local businesses and improved economic participation through place‑based delivery that reflects regional strengths, opportunities and challenges.

Long-term impact

The LGF supports long‑term planning, prevention, integration and collaboration. LGF investments are expected to align with wider strategies, consider long‑term outcomes and assess impacts across economic, social, environmental and cultural well‑being.

Tackling economic inequality and promoting fair growth

Investment decisions are informed by evidence of need and opportunity, including socio‑economic disparities between places. This will reduce economic inequalities and promote inclusive and fair growth. The LGF aims to tackle key issues which cause economic inequality, such as removing barriers to accessing employment for those who are economically inactive. Socio-economic analysis shows that economic inactivity, rather than unemployment alone, is a central labour market challenge for Wales. 

We expect regional bodies to clearly demonstrate how they have targeted their funding to areas that are lagging and where the catch-up potential is greatest, including areas which may not attract other sources of investment. The approach to investment should be strategic and based on functional economic areas, like to travel-to-work areas. Targeting approaches and portfolio development should not simply result in funding being divided between local authorities. As part of this approach regional bodies are expected to develop cross-regional initiatives or investment approaches where appropriate and beneficial; for example, previous cross-regional initiatives have included Arfor, Heads of the Valleys, the Marches, or others.

Climate change, environment and sustainable development

Through its focus on infrastructure, place‑based investment and regional planning and prioritisation, the LGF supports decarbonisation, climate resilience and environmental sustainability. Project‑level requirements ensure that economic growth is compatible with environmental responsibilities.

Coherence across public investment and regional governance

The LGF operates alongside existing Welsh Government and UK Government programmes, including City and Growth Deals, Business Wales interventions, Sector-Based Growth Zones (linked to the UK Industrial Strategy), Investment Zones and Freeports and should be used to address gaps in regional investment, improve alignment, reduce duplication and maximise impact. It should be used to support more joined‑up planning and delivery across policy areas such as clusters and site development, regeneration, transport, skills, employability and business support.

The guiding principles provide a framework for how the LGF is designed, allocated and delivered. They provide a common reference point for governance, appraisal and monitoring, while allowing flexibility to respond to regional needs and opportunities.

Cross‑cutting themes have been incorporated into the guiding principles following consultation feedback, recognising that equality, sustainable development (including climate action) and well-being influence the effectiveness and impact of all investment. The full list of guiding principles is set out in Annex B.

Socio‑economic analysis

The Socio‑economic analysis (SEA) provides an overview of the economic, labour market and infrastructure context in Wales and has informed the strategic direction of the LGF Investment Plan. It sets out evidence on productivity gaps, regional disparities, economic inactivity and infrastructure constraints, supporting the Investment Plan’s focus on productivity‑led growth and regional catch‑up.

The SEA covers a wider range of issues than those the LGF is intended to fund. It includes evidence on matters such as housing and fuel poverty, childcare and caring responsibilities, community wellbeing activity, and generic employability and youth services. This content is included to provide context on the socio‑economic landscape and should not be read as indicating that these areas are eligible for LGF support.

The Investment Plan applies the SEA evidence through the LGF priorities and objectives, eligibility criteria, and the appraisal, assurance and monitoring framework. This ensures that LGF investment is focused on those economic levers where it can add value and have impact given the funding mix and limited timescales. In practice, SEA evidence should not be used as a basis for using LGF funding for stand‑alone health, welfare, housing, childcare, or general community services, nor for generic business or employability provision without a clear productivity or labour market rationale. All regional body plans should demonstrate alignment with the key drivers set out in the Investment Plan, tailored and prioritised according to regional needs and opportunities. 

This section sets out how the LGF is governed and delivered at national, regional and local levels.

The LGF in Wales combines national strategic oversight with regional coordination and local delivery. It is supported by governance, assurance and accountability arrangements to ensure consistency, value for money and effective delivery across Wales.

National policy framework and oversight

The LGF operates within a Welsh Government-led national framework that sets the overall policy intent, priorities and conditions for the Fund. Within this framework, the Welsh Government has developed the LGF Investment Plan informed by stakeholders engagement, ensuring alignment with UK Government requirements and Welsh Government objectives alongside establishing governance and oversight arrangements for delivery. It also establishes the monitoring, evaluation and risk management requirements that apply across the LGF. Please see Annex C for a full description of the governance and accountability framework.

This national framework ensures consistency and coherence across Wales, while allowing flexibility in how funding is applied regionally. Most LGF funding is devolved to regions, reflecting the strategic role of regions in understanding regional and local economic strengths, challenges and opportunities, and the need for a clear prioritisation and targeting of funding to shape investment portfolios informed by regional evidence and strategies. Welsh Government remains Accounting Officer for this funding and will need to demonstrate to the Senedd and UK Government the Investment Plan is being delivered as intended. 

The regional design of the LGF in Wales is a conditional delegation of funding and responsibility from the Welsh Government to regional bodies, based on the regional approach set out in the Investment Plan. Regions will need to take on a strategic role to prioritise objectives, target funding, develop regional portfolios, and oversee delivery. This is vital to ensure strategic coherence, avoid duplication, and to not spread funding too thinly. It also means real accountability for regional bodies rather than these decisions being made by the Welsh Government. As such, regional bodies should not just be transferring all funding or delegating all decisions to individual local authorities. Doing so would undermine the strategic policy intent of the Investment Plan and regional approach. 

Some interventions may be planned or managed at a cross-regional or pan‑Wales level where this offers clear benefits, such as economies of scale, coordinated innovation activity or access to specialist expertise. Where this approach is taken, pan‑Wales projects will be expected to involve local and/or regional delivery mechanisms to ensure alignment to regional priorities as appropriate. Cross-regional or pan-Wales projects can be initiated by regional bodies working together or may be facilitated by the Welsh Government working with the regional bodies. 

Investment objectives and targeting

The LGF operates through a portfolio approach, with investments designed to work together in each region as a coherent package to address specific needs and opportunities. A menu of objectives from which regions are expected to select are set out in the Investment Plan. There should be a clear rationale from each region for the objectives they choose to prioritise and the funding attached to each, selecting all objectives would not be expected given this is likely to spread funding too thinly and limit the impact it will have. The approach enables regions to combine infrastructure, business support, employability support and skills activity in a coordinated way, align with other funding streams, and prioritise available resources to maximise cumulative impact. 

Choices should be made at the regional level to further narrow down the options set out in the national Investment Plan. This should include targeting approaches at a thematic level (e.g. types of business or sectors being prioritised, particular cohorts of economically inactive, or sites identified in regional plans) and spatial level (e.g. areas of higher economic inactivity, to take advantage of a specific regional opportunity, or tackle viability gaps for areas of historic underinvestment). Spatial targeting approaches should be based on functional economic areas rather than simply using local authority boundaries, for example travel-to-work areas. Spatial targeting should also consider opportunities for cross-regional or cross-border activity where collaboration with other regions could help deliver benefits. 

The priorities and objectives focus investment on areas with the greatest potential to raise productivity and reduce economic inequalities. They support more productive and innovative businesses, increased participation and progression in the labour market for underrepresented groups, and contribute towards improvements in productivity, incomes and economic inclusion.

The priorities are interconnected and should be considered collectively. Project activities are not required to be solely constrained to a single priority, but for the purposes of monitoring expenditure each project will need to be allocated to the priority which the majority of activity aligns to. However, outputs and outcomes from the entire suite are applicable, not just those in the allocated priority. Please see the investment plan for the full list of priorities and objectives.

Transition year planning and delivery by lead local authorities for each region

During the transition year (April 2026 to March 2027), LGF delivery will be led by the lead local authorities in each region (coterminous with the CJC footprint), building on capacity developed through the Shared Prosperity Fund. Lead local authorities are responsible for managing LGF funding and delivery and for submitting Transition Plans to the Welsh Government setting out proposed investments, milestones, outputs and outcomes. They will be accountable for ensuring strategic coherence in the portfolios in their region. 

Delivery during the transition year must align with LGF objectives and long‑term regional ambition. Supporting transition to the CJC‑led delivery model is a mandatory delivery outcome for lead local authorities. We will work with each region to assess progress towards CJC readiness at the six-month review, which will inform decisions on future funding. Further information on the six-month review can be found in the ‘Monitoring Requirements’ section. We are developing further detail on how CJC readiness will be assessed, and we will discuss this with regional bodies in due course.

Regional planning and oversight through Corporate Joint Committees (CJCs)

From 2027 onwards, responsibility for the strategic approach to planning, prioritisation, portfolio development and oversight will transfer to CJCs. CJCs will lead the development of Regional Growth Plans as part of a long-term regional vision, working with partners, communities, the Welsh Government and citizens to provide a coherent and democratically accountable framework for regional investment. This regional, place‑based approach will take account of regional economic needs and opportunities, consider how the current investment landscape is addressing those needs and opportunities, and identify gaps and priorities for investment. As part of that Regional Growth Plan CJCs will be asked to identify how the LGF will be used to invest in some of those gaps and how it supports alignment with other activity in the region such as Investment Zones, City and Growth Deals, Freeports, private investment, transport plans, and other economic initiatives. Further guidance on the content of the Regional Growth Plan will be published separately. 

Project funding may be awarded to any appropriate body approved by the relevant regional body. An appropriate body is one with a legal constitution that enables it to receive and manage public funding and that is acceptable to the regional body. 

To be eligible for LGF support, projects must demonstrate strong strategic alignment with LGF priorities and objectives, wider UK Government and Welsh Government priorities, and relevant regional strategies, and must be consistent with the Well‑being of Future Generations (Wales) Act 2015. A key factor should be whether the proposal can demonstrate a contribution to the productivity goal, in particular in areas further behind. 

Projects funded through LGF should be able to credibly demonstrate that they could deliver (or contribute to delivering) some of the outputs included in the LGF Wales Indicators Framework within the programme period. They should also be expected to generate (or contribute towards generating) some of the outcomes included in the framework, either within the programme period or over the longer term. Projects that do not have a realistic prospect of delivering outputs and generating outcomes included in the framework should not be supported through the Fund.

Projects must add value, avoid duplication with other funding programmes and take account of opportunities to maximise investment from Public Finance Institutions. They must comprise eligible activity forming part of a coherent investment portfolio and demonstrate that delivery is feasible within LGF timescales, with clear milestones, risk management and partnership arrangements. 

Funding may be used to support feasibility studies, provided that the project being assessed aligns with the objectives and criteria of the LGF. Whilst there are no specific outputs / outcomes relating to feasibility studies included within the LGF Wales Indicators Framework, funding to support feasibility studies would be considered eligible where there is a credible pathway to a future project that would deliver outputs and/or outcomes included in the indicators framework, either within or beyond the programme period. Where regions are considering multiple potential investment options (for example, several different sites), it would not represent good value for money to commission feasibility studies for all options. In these circumstances, regions should prioritise and narrow down options before commissioning detailed feasibility work, ensuring that funding is used proportionately and effectively. Prioritisation could be informed by criteria such as strategic alignment with LGF priorities, likelihood of deliverability within required timescales, indicative value for money, potential economic and social impact, deliverability risks, and the level of stakeholder or partner support. 

Projects must meet minimum standards for governance, monitoring and evaluation, and comply with all relevant statutory duties, including those relating to equality, the Welsh language, the environment and children’s rights. Any identified gaps must be capable of being addressed prior to approval. Projects are expected to fully embed Welsh language considerations in supporting the vibrancy of Welsh-speaking communities, meaning that the Welsh language is actively considered and integrated at each stage of project design and delivery. This goes beyond compliance with bilingual requirements and includes considering impacts, maximising opportunities to increase the use of Welsh, and embedding Welsh language provision within service delivery models and workforce planning.

Using additional funding alongside the Local Growth Fund to support investments is encouraged where it strengthens delivery and maximises impact. This includes drawing on complementary programmes, including UK Government programmes, private funding investments, and funding streams where there is clear alignment with objectives and demonstrable additional value.

In doing so, proposals should reflect good practice in the use of public funds, including the use of Welsh Government grant funds, ensuring that any alignment with other funding sources delivers clear additionality, represents value for money, and avoids duplication of existing support.

The LGF is designed to support productivity growth and to tackle economic inequalities across Wales. It will not support activity that falls outside its core economic purpose. Activity that aligns with LGF priorities and objectives, and is not listed as ineligible, may be eligible for funding.

Activity not aligned with LGF priorities and objectives

Activity is considered ineligible where it does not clearly align with one or more LGF priorities and objectives or could not credibly lead to delivering outputs and generating outcomes included in the LGF Wales Indicators Framework, within or beyond the programme’s funding period. All Regional Growth Plans must demonstrate a clear theory of change linking investment to productivity growth and reduced economic inequalities. All projects must be able to demonstrate a direct contribution to objectives in both the Investment Plan and any regional plan under which they are funded.

Activity that duplicates existing provision or funding streams

The LGF will not support activity that duplicates existing provision or funding streams, including statutory services, established Welsh Government or UK Government programmes, or other place‑based investment such as City and Growth Deals, Investment Zones, or Freeports. Its purpose is to be complementary to those wider investments and to target investment to areas which may already be attracting significant levels of public and private investment or where there are gaps in provision. Where proposals complement existing provision, they must demonstrate clear additionality, showing how LGF investment complements and enhances existing activity by extending scale, reach, or outcomes, rather than displacing or replicating them. If there is uncertainty over whether a proposal duplicates or complements existing provision, the following points can be considered:

1. Additionality

• What will be delivered over and above existing provision?

2. Non-substitution

• What existing funding or provision is in place, and how will this not be displaced?

3. Complementarity

• How does the LGF intervention align with and enhance other programmes?

4. Delivery rationale

• Why is LGF (rather than existing funding streams) the appropriate mechanism?

General social, wellbeing or community activity with no clear economic impact

Activity that is primarily social, wellbeing‑focused or community‑focused will not be supported where there is no clear and measurable contribution to economic outcomes as set out in the Investment Plan and related documents. This includes general community development or cohesion activity that is not clearly embedded within a wider, evidence‑based economic intervention.

Revenue‑only service delivery with no transformational or lasting impact

Revenue‑only activity that sustains existing provision or funds ongoing core services without delivering transformational or lasting economic impact is not eligible. Where revenue funding is permitted, it must be time‑limited and clearly justified as necessary to enable transformational, productivity‑enhancing investment, rather than ongoing service delivery. All projects should include clear exit strategies to avoid creating funding dependencies. 

Small‑scale or localised projects with no regional or strategic impact

The LGF will not support small‑scale or highly localised projects that lack a clear regional rationale or strategic impact. All projects must demonstrate how they contribute to coherent, region‑wide economic outcomes aligned with agreed regional priorities. 

Activity primarily aimed at children and young people under 16

In order to carefully target the available revenue funding, activity primarily aimed at children and young people under the age of 16 is not eligible for LGF support. This includes youth work or engagement programmes, child‑focused enrichment or wellbeing activity, holiday provision, childcare or play schemes, and school‑age attainment or non‑vocational educational support. Such activity is more appropriately supported through education, youth, family or community policy frameworks. 

As an exception, individuals who reach the Statutory School Leaving Date aged 15 can be eligible for support through LGF, providing they have reached the Statutory School Leaving Date at the point they begin to engage with LGF-funded activity. In addition, capital or infrastructure investment may be considered where there is clear and evidenced future economic impact and where the asset or facility is predominantly used by post‑16 or working‑age beneficiaries. 

Payment and compliance guidance document

Certain specific costs are ineligible, including mandatory staff training, alcohol, fines, penalties and recoverable VAT. 

This section sets out the funding structure, spatial and thematic allocation framework, and the conditions that apply to the payment of LGF funding.

Capital and revenue split

The LGF is delivered on a 70 per cent capital and 30 per cent revenue basis across Wales. Individual projects may therefore be wholly capital or wholly revenue in nature, although many projects will comprise a mix of both.

The capital‑focus of the LGF is intended to support long‑term productivity growth, particularly through investment in strategic infrastructure, business premises, transport, energy and innovation assets. The Welsh Government has sought to mitigate the constraints of the limited revenue envelope by prioritising revenue funding for interventions that are most dependent on it, most notably support to help people into work and to increase skills.

If the LGF is used to develop, create, purchase or improve capital assets, in particular but not exclusively land and property, appropriate controls and monitoring arrangements that ensure the asset is used for the purpose for which funding was awarded for five years should be put in place. Controls and monitoring should allow for recovery of funding, within the five-year period only, from the recipient if assets are sold or cease to be used for purposes for which funding was provided, in full or in part.

Spatial and thematic allocations

LGF funding has been allocated across regions on a spatial basis to support fair, transparent and evidence‑led investment across Wales, consistent with the objectives of tackling economic inequality and supporting productivity growth. From 2027–28 onwards, indicative regional allocations have been determined using an allocation methodology that weights relative levels of deprivation, productivity and rurality. Specifically, allocations are informed by a composite index comprising 60 per cent based on the Welsh Index of Multiple Deprivation (WIMD), 30 per cent based on relative productivity levels, and 10 per cent based on rurality and sparsity, reflecting the additional barriers to growth faced by more peripheral and less densely populated areas.

During the transition year (2026–27), regional allocations reflect the final year of the Shared Prosperity Fund to provide stability and predictability for planning purposes and to support a smooth transition to the CJC‑led delivery model. From 2027–28 onwards, allocations will move to the agreed methodology set out above, subject to the development and approval of Regional Growth Plans.

In parallel with the spatial distribution of funding, thematic allocations have been set at the national level to support balanced delivery of the LGF priorities across Wales, as set out in the Investment Plan. These thematic allocations reflect the overall funding profile of the LGF, including the 70 per cent capital and 30 per cent revenue split, evidence from the socio‑economic analysis and consultation, and the need to support productivity growth through a combination of business investment, skills and enabling infrastructure.

For the post‑transition period, the national thematic framework provides that a significant proportion of capital funding is directed towards Priority 3 (Improving regional infrastructure), recognising the capital‑intensive nature of infrastructure investment. Capital funding is also allocated to Priority 1 (More productive and competitive businesses) to support research, development and innovation and investment in high‑growth businesses. Revenue funding is weighted more strongly towards Priority 2 (Increasing skills and supporting people into work), reflecting the importance of addressing skills gaps and economic inactivity in supporting long‑term productivity growth, with additional revenue support for business‑focused activity and infrastructure delivery where required.

Regional bodies must develop investment portfolios that operate within their overall regional funding envelope and contribute collectively to delivery of the agreed thematic balance across Wales. While regions retain flexibility to shape portfolios that reflect local needs, opportunities and evidence, funding must be deployed in a way that is consistent with both the spatial allocation methodology and the thematic framework set out in the Investment Plan. Regional bodies are given flexibility to move up to 30% of funding between investment priorities, mirroring flexibilities afforded to Welsh Government in the agreement with the UK Government. Should significant cumulative changes from regional bodies risk national tolerances being exceeded these flexibilities may need to be revisited. It is important to maintain regular dialogue on plans and delivery to avoid this occurring. 

Administration and capacity building

Administration costs are capped at 4 per cent of total LGF allocations in each financial year. This cap applies across the programme and ensures that the majority of funding is directed towards delivery while allowing proportionate programme management, governance and assurance. Costs may include a mix of revenue and capital expenditure and will be monitored against actual administration costs incurred during the management and administration of the fund.

In recognition of the need to build capacity and capability within CJCs ahead of the move to full CJC‑led delivery, £800,000 of revenue funding has been allocated in 2026–27 to support CJC development, equating to £200,000 per CJC. This funding is provided to support strengthened partnership working, transparency, and preparation of Regional Growth Plans and is included within the overall administration cap. The funding can also be used to build capacity and capability within the CJC to undertake the functions and roles to oversee delivery of the Local Growth Fund from April 2027.

Pan Wales investment

From 2027–28 onwards, an indicative pan‑Wales capital allocation of approximately £25,000,000 per year will support cross‑regional and national‑scale interventions where these offer clear benefits, such as economies of scale, access to specialist expertise, or reduced duplication. This allocation is ring‑fenced for capital investment only, with all revenue funding remaining at the regional level. Indicative regional allocations for the pan-Wales capital funding has been included in the Investment Plan to illustrate expectations for the scale of regional and local delivery of those pan-Wales interventions. 

Coordination of potential pan‑Wales investment for this indicative funding will be led by Welsh Government and potential ideas will be developed in partnership with regions and national stakeholders. Any pan-Wales investment is subject to the development and approval of robust business cases that demonstrate clear regional benefit and alignment with the LGF priorities and objectives. Delivery options will consider regional and local options to ensure balanced implementation.  

Regional bodies are encouraged to consider options for cross-regional or pan-Wales activities on their own initiative or to request the support of Welsh Government to develop proposals. This could include across regions within Wales, in line with previous cross regional initiatives such Arfor or across the Heads of the Valleys, or cross-border, with regions in England or with Ireland. 

The LGF operates a plan‑led funding model. Welsh Government does not intend to invite or assess standalone project bids, with the exception of any pan-Wales or cross-regional projects. The majority of funding is planned and overseen regionally, with project portfolios developed at that regional level. Funding decisions are therefore made on the basis of Transition Plans (during 2026–27) and Regional Growth Plans (from 2027 onwards), which are intended to set out coherent portfolios of activity aligned to LGF priorities and objectives. Individual projects are developed, approved and managed within the framework in the agreed plans. Regional bodies are accountable for ensuring a prioritised and targeted portfolio of projects, that investment decisions are strategic, coordinated and evidence‑based, and that projects collectively contribute to long‑term regional and national economic outcomes rather than being assessed in isolation.

Regional bodies are encouraged to collaborate across all sectors and institutions e.g. higher education / further education, third sector, private sector etc. when producing their regional plans. Regional bodies are also encouraged to be mindful of neighbouring regions’ proposals, especially for capital schemes, and to ensure that their regional plans address the needs of both rural and urban areas of their region. 

Plans are assessed by Welsh Government officials using a structured appraisal framework aligned to the Transition Plan and Regional Growth Plan templates. Assessment focuses on areas such as strategic fit with LGF objectives and wider Welsh and UK Government priorities, the quality and coherence of the proposed investment portfolio, deliverability and value for money, governance and assurance arrangements, partnership working, and monitoring and evaluation proposals. 

Following approval, funding is confirmed through the issue of a Grant Award Letter (GAL), which sets out the conditions of funding, including delivery milestones, monitoring and reporting requirements, and assurance expectations. Only once the GAL is issued and accepted can LGF funding be drawn down. The process is illustrated below.

Regional body plan application stages

The LGF operates a structured, plan‑led application process to ensure that funding decisions are objective, proportionate and auditable.

Stage 1: Plan received from regional body

Stage 2: The Assessment Panel assesses the plan, applying the assessment criteria. If the plan is rejected by the panel, it is returned to the regional body and the process restarts. If the plan is accepted, the process proceeds to Stage 3.

Stage 3: Evidence baselined with regional body

Stage 4: Recommendations made to Board Panel

Stage 5: Board decision

Stage 6: Issue and return of Grant Award

Transition plan assessment criteria

Submitted Transition Plans are assessed against the following criteria to inform funding recommendations and decisions.

The criteria are: 

1. Executive Summary
2. Strategic Fit
3. Investment Overview 
4. Delivery Plan 
5. Governance and Assurance 
6. Partnership Arrangements
7. Monitoring and Evaluation 
8. Transition to Year 2 (Regional Approach) 
9. Risk Management 
10.  Financial Summary 

Each criterion has sub-headings in the plan templates and Funding Decision Report ensuring comprehensive breakdown of all relevant subject areas in each. Lead local authorities can view the ‘Guidance for Completing the Local Growth Fund Transition Year Plan’ document for more detail on the criteria under each heading. 

Requirements and assessment criteria for the Regional Growth Plans will follow in due course.

This section sets out high-level information on the monitoring, reporting, and evaluation arrangements that apply to LGF delivery. Further information on these requirements, including templates and timescales for reporting processes, will be provided to Regional Bodies separately. 

Monitoring requirements

The LGF operates a structured and proportionate monitoring framework to ensure accountability, track delivery and support continuous improvement over the life of the programme. Monitoring takes place at project, regional and national levels, with information collected by Welsh Government from lead local authorities during the transition year and from CJCs once CJC delivery is in place. Regional Bodies are primarily responsible for monitoring and performance management within their region, with the Welsh Government providing national oversight. Delivery partners are required to report on progress against agreed high-level milestones, outputs and outcomes, financial performance and spend profiles. Monitoring combines quantitative indicators with qualitative evidence to provide insight into delivery challenges and emerging impacts, and feeds into Welsh Government governance, reporting to the Senedd, and the annual review process with the UK Government set out in the funding Memorandum of Understanding and the Technical Note.

There is a 6‑month review in the transition year, which is a formal assurance checkpoint used to assess progress with delivery and determine progress towards the move from lead local authority delivery to CJC‑led planning and co-ordination. It draws on monitoring returns and progress evidence to review performance against agreed milestones and management of risks. There is a particular focus on CJC readiness in areas such as governance, financial management, partnership working and strategic planning. 

Reporting requirements

Delivery partners will complete a quarterly progress report, summarising progress in various key metrics and sub-headings. A list of LGF specific outcomes and indicators for Wales have been developed and can be found here. The content will form the basis of the formal review.

Progress review meetings 

Programme support officials from the Welsh Government will conduct quarterly reviews and meetings with each regional body to assess progress and provide assurance over delivery. These meetings will provide an opportunity for Regional Bodies to provide additional context on their reporting submissions, discuss progress to date, and highlight any risks or issues that may affect delivery over the coming quarter or the remainder of the programme. They will also provide an opportunity to agree any actions needed to address identified risks or issues.

Welsh Government-led evaluation

Welsh Government-led post‑programme evaluation of the LGF is currently being considered and will likely assess the effectiveness, efficiency and impact of the programme in delivering its intended economic, social and environmental outcomes across Wales. A sub-group of the LGF programme board is being set up which will discuss the approach to evaluation. The evaluation will be conducted in partnership with the regional bodies and will likely draw on programme‑wide monitoring data alongside targeted qualitative evidence to understand what has worked well, where delivery challenges have arisen, and how impacts have varied by place and intervention type. Findings will be shared with Ministers and senior officials to inform future investment decisions, and published to support transparency, accountability and learning among delivery partners and stakeholders.

Compliance and assurance arrangements

As part of the Transition Plan, each lead local authority must set out the compliance and assurance regime it will apply to LGF‑funded activity. This regime must provide assurance that funding has been used appropriately and in line with LGF requirements, and support the Section 151 Officer in authorising claims submitted to Welsh Government. It will be the responsibility of the lead local authority to decide the extent of their compliance checks.

The Welsh Government Programme Support Team will undertake proportionate compliance and assurance reviews to confirm that agreed arrangements are operating effectively and in line with the approved Transition Plan. These reviews will normally be undertaken on a sample basis but may be extended where concerns are identified regarding performance or adherence to agreed review processes.

These reviews may be undertaken on‑site or remotely, depending on the lead local authority’s delivery arrangements and track record.

The reviews will focus on:

• the eligibility of expenditure claimed under the LGF;
• conflicts of interest management;
• procurement; 
• the achievement of declared indicators.

This will include testing a sample of indicators to confirm that lead local authorities have obtained sufficient evidence to support eligibility, achievement and the claimed level of delivery. In addition to meeting the evidence requirements set out in the LGF Wales Indicators Framework, lead local authorities must be able to demonstrate a clear and auditable link between indicator achievement and the LGF‑funded intervention.

Following completion of compliance and assurance reviews, the Welsh Government Programme Support Team will recommend the release of claimed funds, subject to any necessary adjustments for ineligible expenditure, insufficient delivery progress or the recovery of outstanding advance payments.

Risk Management and Issue Escalation

Regional bodies are responsible for identifying, assessing and managing all risks that may affect successful delivery of LGF outcomes.

Each regional body must maintain a regularly updated risk register, submitted as part of the quarterly progress report. Risks should be clearly described, prioritised and assigned appropriate mitigating actions, owners and escalation routes.

Delivery issues should be managed through agreed regional governance arrangements. Where issues remain unresolved, or where delivery, performance or compliance is considered inadequate, there must be a clear route for escalation and Welsh Government must be informed as appropriate. A lessons‑learned exercise should be undertaken for any significant issue encountered, to support continuous improvement and effective programme delivery.

Compliance and legal requirements 

This subsection sets out the key legal, regulatory and policy requirements that apply to LGF‑funded activity. Regional bodies are responsible for ensuring that all funded activity complies with these requirements and that appropriate arrangements are in place to manage risk and assurance.

Subsidy control

Regional bodies must consider whether LGF‑funded activity constitutes a subsidy and, where relevant, comply with the requirements of the Subsidy Control Act 2022 and any international obligations. Public authorities must also have regard to the Subsidy Control guidance. Public authorities are responsible for ensuring that any subsidy or subsidy scheme is consistent with the subsidy control principles before it is awarded and ensuring any transparency requirements are met.

Where subsidy control is engaged, public authorities should complete a subsidy control principles assessment using the appropriate Welsh Government template and retain this as part of their project records.

This guidance does not constitute legal advice. Regional bodies remain responsible for ensuring compliance with subsidy control requirements and should seek their own legal advice where there is uncertainty regarding the application or lawfulness of a proposed subsidy or scheme.

Equality and fair treatment

All LGF‑funded activity must comply with the Public Sector Equality Duty (PSED) under the Equality Act 2010. Regional bodies must have due regard to the need to eliminate discrimination, advance equality of opportunity and foster good relations when exercising their functions in relation to the LGF.

Welsh Government is committed to the social model of disability, anti‑racism and anti‑oppression and has zero tolerance for bullying, harassment, discrimination, abuse or exploitation. Regional bodies are encouraged to conduct impact assessments on their plans to ensure that plans do not have unforeseen impacts and to reflect these commitments in their governance, decision‑making and delivery arrangements for the LGF.

Health impact assessment

The Health Impact Assessment (Wales) Regulations 2025 state that from April 2027, a public body must carry out a HIA when it proposes to make a decision of a strategic nature about how to exercise its functions. Therefore, whilst it is not mandated that lead local authorities conduct a health impact assessment on their transition plan, it’s strongly encouraged that lead local authorities do this to align with the incoming legislation. The law will also apply to CJCs. 

Public bodies have a role to play in reducing health inequalities to tackle the contribution made by the wider determinants of health, such as individual lifestyle factors, community influences, living and working conditions, and more general social conditions. 

A HIA is an assessment of the likely effect, both in the short term and in the long term, of a proposed action or decision on the physical and mental health of the people of Wales or of some of the people of Wales. Public Health Wales has produced guidance for public bodies on implementing the regulations and this can be found on the link below. 

Health Impact Assessment (HIA) guide and resources - Wales Health Impact Assessment Support Unit

Public Health Wales will also be running regulation specific training courses and these are available from Autumn 2026.

Biodiversity impact assessment

Projects are encouraged to assess their impact on biodiversity and to have this done by an appropriately qualified person. Regional bodies are encouraged to ensure that these assessments are completed to an acceptable standard, with sufficient detail, and regional bodies are encouraged to record these biodiversity impact assessments and any biodiversity-related decisions.

The LGF is directed and overseen in Wales by the Welsh Government and funded by the UK Government. All partners and delivery organisations share responsibility to ensure projects supported through the LGF acknowledge public funding in any publicity and media activity and demonstrate the LGF’s impact in Wales.

The branding and publicity requirements outlined in the UK Government’s technical note should be followed, as well as acknowledging the Welsh Government’s funding using the guidance outlined below. 

This section of the guidance may be updated or augmented as further discussions take place between the Welsh Government and UK Government on branding and communication protocols. 

Overview of publicity requirements

When undertaking any publicity, funded organisations should:

• acknowledge the support of the LGF in Wales managed by the Welsh Government when publicising projects
• notify the respective lead local authority (and from 2027 the respective CJC) in advance of project launches, key milestones and significant achievements
• use Welsh Government and UK Government logos on printed and digital materials where appropriate

Branding and use of logos

General principles:

Publicity relating to an LGF‑supported project should reflect its public funding. This includes:

• printed publications, reports and promotional literature
• press releases and media briefings
• presentations and display materials
• websites, social media and other digital content

Welsh Government and UK Government logos

Both the Welsh Government logo and the UK Government logo should be used on LGF‑related materials.

Logos should be clearly visible, of equal prominence, and reproduced at an appropriate size and quality.

Logos must not be altered, distorted, recoloured or placed within restrictive boxes. 

Funding acknowledgement in press releases and publicity

Press releases relating to LGF‑funded activity should include a clear funding acknowledgement in the main body of the text or in the notes to editors or footnotes.

A communications plan which outlines the specific requirements will be shared with Regional Bodies.

Project launches, milestones and achievements

Notification requirements:

Funded organisations should notify the respective lead local authority (and from 2027, the respective CJC) at an early stage of:

• proposed project launches
• key delivery milestones or outputs
• significant achievements or success stories
• project completion events

This will mean the respective lead authority (or CJC) can provide early notice to the Welsh Government of any opportunities for Ministerial involvement in some LGF project publicity to help maximise positive coverage and ensure announcements are co-ordinated as follows:

• inclusion of quotes by Welsh Minister(s) in press releases
• potential attendance by Welsh Minister(s) at events or visits

The Welsh Government will liaise as appropriate with the UK Government on any major announcements. 

Website and digital requirements

LGF-funded organisations should acknowledge LGF support on their website and relevant digital platforms where appropriate. This could include Welsh Government and UK Government logos being displayed or a statement recognising the project’s support from the UK Local Growth Fund in Wales.

Digital content should be accessible and reflect Welsh Government standards, including bilingual provision. When displayed, logos should be in an accessible format and remain clear on different devices.

Further advice

Funded organisations should contact, in the first instance, the respective lead local authority in the transition year (and from 2027 the CJC) for advice and support with communications or media activity. For pan-Wales projects, funded organisations should contact the Welsh Government via LocalGrowthFund@gov.wales. 

All expenditure must comply with the Procurement Act 2023, the Social Partnership and Public Procurement (Wales) Act 2023, and relevant local constitutions, grant rules and procedures.

Regional bodies are responsible for determining the most appropriate delivery route for LGF‑funded activity and must ensure that their Chief Finance Officer is satisfied that procurement and grant arrangements are compliant. In doing so, regional bodies must have regard to all relevant legislation, including (but not limited to) the Equality Act 2010, Subsidy Control Act 2022, Well‑being of Future Generations (Wales) Act 2015, the Modern Slavery Act 2015 and IR35.

Where appropriate, regional bodies are also expected to consider:

• sustainable and green procurement approaches;
• fair work principles;
• advance publication of contract pipelines; and
• opportunities for collaborative or innovative procurement that supports wider well‑being outcomes and the Foundational Economy.

Fraud and Corruption Risk Assessment (FCRA) and due diligence

Regional bodies must ensure that robust, proportionate and risk-based arrangements are in place to prevent, identify and respond to any potential fraud, corruption and irregularity across all LGF activity. Necessary and proportionate fraud and corruption risk assessment and due diligence arrangements are required in line with Welsh Government expectations of grant recipients.

As a minimum, regional bodies must:

• undertake robust fraud and corruption risk assessments and due diligence at a level proportionate to project risk;
• ensure appropriate evidence is gathered prior to the release of funds;
• monitor and review identified risks throughout delivery; 
• Have clear procedures for reporting fraud, corruption or irregularity concerns (Fraud Response Plan FRP) and notifying Welsh Government, and
• retain records to support and verify due diligence checks and any changes to the FCRA , FRP and dates when reviewed for audit and assurance requirements.

These arrangements must meet the monitoring and accountability requirements set out in the Social Partnership and Public Procurement (Wales) Act 2023.

Personal data and information governance

Where LGF funding supports staff or delivery activity involving personal data, regional bodies must ensure compliance with data protection requirements. Staff must be informed that their role is supported by LGF funding and that relevant personal data may be shared with Welsh Government for monitoring and assurance purposes.

Personal data shared with the Welsh Government for evaluation and compliance purposes are detailed in the Data Sharing Agreement.

Additionality

The extent to which LGF funding supports activity that would not otherwise take place and avoids duplication with existing provision.

Assessment panel

A Welsh Government panel responsible for assessing submitted Transition Plans or Regional Growth Plans against the LGF appraisal criteria and making recommendations on funding decisions.

CJC

Corporate Joint Committees.

Delivery partner    

Organisations that are involved in managing or accessing the funding e.g. local authorities, Corporate Joint Committees, projects etc.

Existing innovation

The development, adaptation or wider adoption of established products, services, processes or technologies to improve productivity, performance or impact.

Funding Decision Report (FDR)

The formal appraisal and recommendation document used by Welsh Government to record assessment of plans and underpin funding decisions.

Grant Award Letter (GAL)

The formal agreement setting out the terms and conditions under which LGF funding is awarded.

Green

An activity that protects and enhances natural systems, or minimises harm to the environment by reducing emissions, waste and resource use.

High growth

Achieving rapid and sustained increases in productivity, turnover or employment, typically through scaling innovative products, services or business models.

High potential

Strong underlying capability and credible prospects for future growth, productivity gains or wider economic impact, even if rapid growth has not yet been realised.

Indicators

Quantitative and qualitative measures used to monitor progress and assess the outputs and outcomes delivered through LGF funded activity.

LGF 

Local Growth Fund.

Local Authority (LA)

A county or county borough council in Wales.

Programme Board

The Welsh Government structure responsible for strategic oversight, assurance and coordination of the LGF.

Projects

Individual proposals approved by a regional body for funding under the LGF.

Recipient

An organisation that receives LGF funding from a regional body to deliver an approved project.

Regional Bodies

A lead local authority during the transition year or a Corporate Joint Committee from 2027 onwards.

Lead Local Authority

The local authority responsible for managing LGF delivery in a region during the transition year.

Regional Growth Plan

A multi year plan developed by a Corporate Joint Committee from 2027 onwards, setting out a regional investment portfolio aligned to a long term vision and LGF objectives.

Regional Plan    

A transition plan or a regional growth plan.

Section 151 Officer

The statutory officer within a local authority or Corporate Joint Committee responsible for the proper administration of the organisation’s financial affairs and for providing assurance over the use of public funds.

Six month review

A formal assurance checkpoint during the transition year used to assess delivery progress, governance arrangements and readiness for the transition to CJC led planning and delivery.

Theory of Change

A structured approach setting out how LGF investments are expected to deliver outputs, outcomes and longer term impacts.

Transition Plan

A plan submitted by a lead local authority for the transition year (2026–27), setting out proposed investments, milestones, outputs, outcomes, governance arrangements and plans for transition to CJC led delivery.

Transition Year (Year 1)

April 2026 to March 2027, during which lead local authorities are responsible for LGF delivery ahead of transition to CJCs.

Investment Plan

The national investment plan for the Local Growth Fund in Wales, setting out LGF priorities, objectives and outcomes, and providing the strategic framework within which regional investment plans are developed.

Welsh Government (WG)

The devolved government for Wales.

Years 2 and 3

April 2027 to March 2029, during which CJCs are responsible for regional planning and delivery of the LGF.

Areas with catch-up potential   

 An area with catch-up potential currently has low productivity, but has potential to increase its productivity quickly with investment. We won’t be defining this numerically, however regional bodies are encouraged to consider catch-up potential when thinking about which areas to invest in.
 

Guiding principles for the Local Growth Fund in Wales

1. Focus on delivering outcomes to support long-term changes. Investments should contribute to regional and national priorities and demonstrate clear impact.
2. Support and empower regions through the CJCs to prioritise portfolios of investments based on regional and local opportunities and needs. We expect CJCs to leverage wider investment with this funding and to work closely with local authorities and the wider partnership. 
3. Integrate with and add value to other UK and Welsh Government programmes to avoid duplication and increase impact and value for money. 
4. Provide enough flexibility to respond to new and emerging evidence and needs, whilst delivering on the UK and Welsh Governments’ shared ambitions. 
5. Plan strategically on a multi-annual basis to provide a greater focus on longer-term outcomes as opposed to spending money quickly. 
6. Integrate equality, sustainable development and the Welsh language in all investments. 
7. Encourage collaborative working across borders, within Wales, and across the UK and internationally where we have shared needs or opportunities.
8. Ensure CJCs, local authorities and key partners have the right capability and capacity to design and deliver the LGF, including for transition arrangements and investing in long-term capacity. 
9. Deliver on our commitment to openness, fairness and transparency of investments by publishing information and data on delivery regularly.

Cross-cutting themes

Equality

Support inclusive growth by reducing barriers to participation in economic activity and promoting fair access to skills, employment and business support across Wales.

Climate

Support Wales’s transition to a low carbon, climate resilient economy while unlocking sustainable economic opportunities.

Well being

Support long term, sustainable prosperity and wider social, economic and environmental well being.
 

Welsh Government is the Accounting Officer for the LGF and is responsible for providing overall strategic oversight, assurance and accountability for the programme. This includes setting the policy framework, approving plans and funding decisions, and overseeing performance and risk through programme‑level governance informed by appraisal, monitoring and formal review points.

Delivery‑level governance sits with regional bodies: lead local authorities during the transition year and CJCs from 2027 onwards. Regional bodies are responsible for managing LGF funding in line with the GAL, maintaining robust financial and governance arrangements, and ensuring compliance by delivery partners.

The LGF Programme Board provides strategic oversight and coordination for the development and delivery of the LGF in Wales, including the assessment of Transition Plans and supporting joined‑up working across policy and delivery interests. 

Together, these arrangements provide a clear and proportionate framework for accountability, effective risk management and a managed transition to regional delivery. 

UK Government

• Sets the overarching UK framework for local growth funding, including the Welsh chapter. 
• Allocates LGF funding for Wales to the Welsh Government. 
• Monitors and evaluates local growth funding at UK level. 
• Undertakes annual reviews with Welsh Government. 
• Maintains an advisory and promotional role.

Welsh Government

• Holds overall accountability for LGF performance, evaluation and reporting to UK Government. 
• Sets the policy framework and national priorities for LGF investment in Wales. 
• Coordinates across national and regional delivery to ensure consistency. 
• Works with regions to agree arrangements for CJCs and oversees governance and performance of Regional Plans.

Regional Bodies

• Provide accountable decision‑making and political leadership at regional level.
• Develop and maintain compliance, governance capacity and partnership arrangements.
• Conduct compliance checks, in line with Welsh Government requirements, on the projects that they fund
• Prepare Transition Plans (lead local authorities) or multi‑year Regional Growth Plans (CJCs).
• Manage regional investment portfolios and ensure delivery of agreed outcomes.
• Work with Welsh Government on national or pan‑Wales projects where relevant.

 Local Areas

• Inform and support the design of Regional Plans to reflect local needs and opportunities. 
• Develop and deliver local projects that contribute to LGF outcomes. 
• Ensure delivery achieves agreed outcomes and supports learning and best practice.