Update on Perth and Kinross Projects Under Tay Cities Region Deal Programme - Update on Local Growth Fund and Regional Economic Partnership Arrangements
Perth and Kinross Council · 25 February 2026
Back to Perth and Kinross Council — 25 February 2026 and its agenda
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Our vision is a Perth and Kinross where everyone can live life well, free from poverty and inequality ___________________________________________________________________ Committee or Board: Perth and Kinross Council Date of Meeting: 25 February 2026 Report Title: Update on Perth and Kinross Projects Under Tay Cities Region Deal Programme - Update on Local Growth Fund and Regional Economic Partnership Arrangements Report Number: 26/51 Report Author: Steve MacDonald, Economic Development Manager – Business, Place and Investment Organisational Lead: Serge Merone, Strategic Lead – Economy, Development and Planning ___________________________________________________________________ 1. Purpose 1.1 The purpose of this report is to give an update on the process of Reshaping the Tay Cities Deal (TCD), including the status of existing projects and possible new projects. The report also seeks to position Perth and Kinross Council in relation to forthcoming regional investment decisions associated with the Local Growth Fund, announced by the UK Government in January 2026 and evolving Regional Economic Partnership arrangements. 1.2 Sections 1. Purpose 2. Recommendations 3. Main Issues 4. Proposals 5. Conclusion 6. Impact Value Assessment 7. Appendices
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2. Recommendations It is recommended that the Council: 2.1 consider and comment on the contents of the report including the scale of funding opportunities from Tay Cities Deal Programme Strand 2 and Local Growth Fund. 2.2 agree that Council priorities are clearly articulated and promoted through the Tay Cities Regional Economic Partnership in relation to Strand 2 projects, taking into account Tay Cities Deal and Local Growth Fund criteria. 2.3 agree that the Leader of the Council and the Chief Executive engage with Tay Cities partners and other local authorities to understand and assess the implications of emerging Scottish and UK Government approaches to Regional Economic Partnerships for local authorities, the Tay Cities Regional Economic Partnership and Perth and Kinross Council. 2.4 agree that Strategic Lead – Economy, Development and Planning provide a further update on projects at a future meeting. 3. Main Issues Tay Cities Regional Deal Programme 3.1 This report presents the Perth and Kinross Tay Cities Deal projects which we are required to appraise under the ‘Reshaping the Tay Cities Deal Programme’. This was considered by the Council on 7 May 2025 (Report 25/111) and on 10 September 2025 (Report 25/223). 3.2 The Tay Cities Region Deal Joint Committee has agreed an approach to reshape the Tay Cities Programme at this halfway stage. This involves an assessment of all projects currently in development within each local authority area. This means confirming with project owners whether the projects continue unchanged (Strand 1A), projects continue with agreed changes (Strand 1B) and new projects replacing decommitted funding (Strand 2). 3.3 A new refreshed programme will be agreed with partners and governments between June and September 2026 for the last four years of the programme. The process and the agreed timetable are outlined in more detail in Appendix 1 of this report. 3.4 Officers have engaged with partners and project owners for the projects being proposed in Perth and Kinross over the past months to assess the viability of projects (Strand 1A and Strand 1B) to allow this to be fed into the overall review of the programme. 3.5 All existing Strand 1A and Strand 1B projects have now been assessed by the Tay Cities groups and actions and milestones have been identified.
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3.6 A summary of the current position of the Strand 1A and Strand 1B projects after assessment is given below. PROGRAMME/PROJECT FUNDING (000’s) STRAND 1A & 1B (by 28 February 26) Funding reallocated to STRAND 2 Perth Bus and Rail Station (PKC) 15,000 Y Low Carbon Transport Active Travel Hub (Phase 2) (PKC) 1,265 Y Regional Skills Programme 16,500 Y Perth Innovation Highway (PKC) 5,000 Y Innerpeffray Library (IL Trust) 100 Y Aerospace Kinross (Aerospace Kinross) 1,600 Y Project Beacon (Binn Eco Park) 5,200 Y Low Carbon Transport - Hydrogen Refuelling Station (Phase 3) (PKC) 1,446 N 1,446 Aviation Academy for Scotland 8,100 N 8,100 Crieff International Highland Centre 1,000 N 1,000 Tay Adventures Pontoons/Accommodations 1,067 N 1,067 Total Strand 1 retained 44,665 Total reallocated to Strand 2 11,613 3.7 The following projects were deemed at Stage 1A on track to continue as entered in the Deal: - Perth Bus and Rail Station – Options Appraisal carried out and Outline Business Case being developed. - Low Carbon Transport (Phase 2 - Active Travel) – Integrated to Perth Bus and Rail Station Outline Business Case. - Innerpeffray Library – Business Justification Case due for submission. - Perth Innovation Highway – Integrated to Perth Eco-Innovation Park project at Perth West with detailed design and planning application currently being developed. - Regional Skills Programme – Revised programme approved. 3.8 The following projects were deemed at Strand 1B to be on track to continue as agreed in the Deal with change requests due to various alterations in the projects: - Project Beacon (Plastics Recycling). Issues related to subsidy control – new delivery model and Outline Business Case being developed to inform change request. - Aerospace Kinross. Change of location site – new site agreed with PKC and change request in progress. 3.9 All Strand 1A and Strand B existing projects have been given the deadline of 28 February 2026 to demonstrate progress towards agreed actions and milestones to remain in the programme.
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3.10 The following projects were deemed not on track to continue as entered in the Deal and have been decommitted: - Low Carbon Transport (Phase 3 - Hydrogen Refuelling Station). Change of location and public accessibility did not align anymore with the agreed Low Carbon Travel Programme funded by the Scottish Government. - Aviation Academy for Scotland. The project was led by UHI Perth and linked closely to Air Service Training which went into liquidation. No alternative project has been identified. Funding was provided by UK Government for a capital project, supporting skills development in a specific sector. - Crieff International Highland Centre. The project had a funding gap which was not resolved, and the project promoter withdrew the project. - Tay Adventures (pontoons and accommodation projects). The project promoter, Tay and Earn Trust, withdrew the projects due to land ownership and deliverability issues. 3.11 In total, it is estimated that £30m has been decommitted at regional level and will be available across the region for new projects under Strand 2. Local Growth Fund 3.12 The UK Government set up the Local Growth Fund, a £140 million initiative supporting economic growth across the UK. It has been presented as a replacement of the UK Shared Prosperity Fund (UKSPF) running alongside the Pride in Place Programme and the existing City Region Deals. 3.13 On 8 January 2026, the UK Government announced the funding allocation for the Local Growth Fund for Scotland from 2026 to 2029. The funding is allocated through the Regional Economic Partnership and Tay Cities Regional Economic Partnership will receive £19.5m over the three years, split between revenue £6.045m (31%) and capital £13.455m (69%). For information, UKSPF was allocated at local authority level and the Perth and Kinross allocation for 2025/26 was £1.877m split between Capital £532K (28%) and Revenue £1.345m (72%). 3.14 The UK Government has still to provide detailed information on the new investment themes and interventions framework, as well as governance and delivery arrangements - including how delivery through Regional Economic Partnerships is expected to work in practice. However, it is understood that the funding would not be split between local authorities but would support regional programme and activities. 3.15 Discussions have taken place between UK Government officials and officers within the Tay Cities region. The shift from local authority-allocated UKSPF funding to regionally-managed Local Growth Fund investment represents both a risk to locally delivered revenue programmes and an opportunity to secure investment in Perth and Kinross. There is a risk of reduced revenue funding to employability activities at local authority level.
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The role of the Regional Economic Partnership and related governance arrangements to channel the Local Growth Fund are not yet known. There would be a need for early influence the focus of the Local Growth Fund which seems to be driven by investment themes around Infrastructure, Business support and Skills and how these relate to the Tay Cities Regional Economic Strategy and Perth and Kinross Economic Action Plan. Regional Economic Partnerships 3.16 The Scottish Government has signalled its intention to strengthen the role of Regional Economic Partnerships (REPs), including potential future legislation to be introduced in the next Parliament, subject to the election outcome, to expand their strategic capacity and devolved competencies in areas such as skills, economic development and planning. 3.17 This approach reflects UK Government expectations that REPs lead the development of tailored regional investment plans as promoted through the Local Growth Fund. 3.18 The Tay Cities Regional Economic Partnership was established in 2021 as part of the Scottish Government REP framework. It is the collaborative regional body responsible for driving inclusive, sustainable economic growth across the Tay Cities Region, covering Angus, Dundee City, North-East Fife, and Perth & Kinross. Through a Joint Committee, it brings together local authorities, the private sector, universities and colleges, enterprise and skills agencies, and the third sector to align investment and delivery around shared regional priorities. The Council is represented by three elected members on the Joint Committee. 3.19 The Partnership builds on the Tay Cities Region Deal agreed in 2020, a £700 million long term investment programme jointly supported by the Scottish and UK Governments, aimed at creating more and better paid jobs, boosting productivity, and reducing inequalities across the region. The partnership provides the strategic leadership and governance needed to coordinate this investment and maximise its economic impact. 3.20 It is guided by the Tay Cities Regional Economic Strategy (2019–2039) and the Prospectus for Regional Growth (2025-2035) which focuses on growing a knowledge led economy, increasing innovation, supporting business growth, and improving access to opportunity and fair work. Key opportunity areas include life sciences, advanced manufacturing, clean energy and the net zero transition, food and drink, research and innovation, and digital and creative industries. 4. PROPOSALS Tay Cites Regional Deal Programme 4.1 It is proposed that officers continue to work with the Strand 1A and 1B existing project owners.
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4.2 Following the Tay Cities Joint Committee meeting on 12 December 2025, a call for new projects was launched under Strand 2. Interested parties have been asked to submit a Strategic Outline Case by 13 March 2026. They have also been asked to register an interest with their local authority to discuss their proposals. The minimum funding ask from Tay Cities Deal is £5m and it is for capital-only. 4.3 The Tay Cities Deal Strategic Outline Case guidance and template (TCRD - Strategic Outline Case Guidance) state several criteria against which proposals will be assessed. The main ones are detailed below: - This funding opportunity is for new projects only and not for current projects or to extend current projects within the Deal. - The prospective new projects should align with the aims and vision of the Deal Document, the Tay Cities Regional Economic Strategy and Region Prospectus for Regional Growth. There are 10 key commitments for the Deal, although projects may have identified additional outputs and benefits in addition to these. All Projects are expected to contribute to the delivery of at least one of the agreed key commitments/benefits. These are: - New Jobs - Construction Jobs - Jobs Protected - Training Places - Journey Time Savings - Development Space Unlocked - Number of Visitors - Start-Ups - SME’s Supported - Leverage - In addition, subsidy control, deliverability and the use of HMRC 5 case model methodology will also be key assessment criteria. 4.4 Officers have engaged with interested external parties while also developing Council-led proposals. These proposals are progressing at different stages and are being led by a mix of private and voluntary sector organisations. They cover several sectors, including food and drink innovation, clean growth innovation, mobility or culture and tourism. 4.5 In addition, under the existing Tay Cities Tourism programme, a Tourism Challenge Fund may be launched. The Council will support this approach, including the development of the criteria that would underpin the fund. 4.6 It is proposed that the Council notes the Tay Cities Deal criteria and associated commitments which will be used to assess proposals. As it is an open call, the Council cannot prevent interested parties from applying.
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However, it is proposed that Council’s support for the development or delivery of any project would be guided by the Tay Cities Deal criteria outlined above, alongside the Council’s corporate priorities. The Council asks that officers continue to work with interested parties to bring forward Strategic Outline Cases under Strand 2, and to support interested parties, including through any Tourism Challenge Fund, should it be approved. Local Growth Fund 4.7 It is proposed that officers continue to liaise with UK Government officials and with their local authority counterparts either directly or through established Tay Cities groups to maximise benefits to Perth and Kinross. 4.8 Officers will also work to create a strong pipeline of projects aligned with Tay Cities Regional Economic Strategy and Prospectus and Perth and Kinross Economic Action Plan to maximise funding opportunities from the Local Growth Fund. Regional Economic Partnerships 4.9 It is proposed that the Leader of the Council and the Chief Executive engage with Tay Cities partners and other local authorities to understand and assess the implications of emerging Scottish and UK Government approaches to Regional Economic Partnerships for local authorities, the Tay Cities Regional Economic Partnership and Perth and Kinross Council, and to report back to the Council. 5. Conclusions 5.1 The Reshaping of the Tay Cities Deal process is a necessary exercise to ensure that both UK Government and Scottish Government funding and any leverage are used efficiently and effectively and contribute to deliver the agreed economic, environmental and social outcomes. 5.2 The Deal was signed on 17 December 2020. The circumstances of individual projects and organisations have changed over this period. Therefore, a reshaping exercise is being carried out. Project promoters and the Council are working hard to retain the funding allocated to Perth and Kinross area either through existing projects or new projects. 5.3 The UK Government has announced a Tay Cities allocation of £19.5m for the Local Growth Fund over three years to be channelled through Tay Cities Regional Economic Partnership. Further details are expected to understand how this funding would be used and will be shared in due course. 5.4 Both Scottish and UK Governments are intending to strengthen the role of Regional Economic Partnerships (REPs) and this would have implications at national, Tay Cities and Perth and Kinross levels.
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6. Impact and Value Assessment 6.1 This report has been classified as being an operational report and as such does not require a full Impact and Value Assessment. 7. Appendices 7.1 Appendix 1: Reshaping the Tay Cities Deal – activities and timetable