14. DirApp - Local Growth Fund - FINAL - 19-01-26
North Ayrshire Council · 27 January 2026
Back to Cabinet — 27 January 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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NORTH AYRSHIRE COUNCIL 27 January 2026 Cabinet Title: Local Growth Fund Purpose: To provide an update on the recently announced Local Growth Fund. Recommendation: That Cabinet: a) Notes the update on the Local Growth Fund; and b) Agrees to receive further updates following engagement with the UK Government. 1. Executive Summary 1.1 The Local Growth Fund is a new £140m UK Government programme, which will replace the UK Shared Prosperity Fund from April 2026. Confirmation was received on 8 January 2026 from the Secretary of State for Scotland that the Ayrshire Regional Economic Partnership would receive £11.8m from the fund over the next three financial years. 1.2 The regional approach to the Local Growth Fund represents a shift from the direct allocation to Local Authorities under the Shared Prosperity Fund which currently supports the Council’s economic development activities. Further information on the Fund is anticipated in Quarter One of 2026 including confirmation of the investment themes, interventions framework, governance and delivery arrangements and the approach to delivery through Regional Economic Partnerships. 1.3 This report aims to provide Cabinet with an update on the current position and work underway to assess and mitigate the impact on the delivery of the Council’s economic development activities. Officers continue to engage with the UK Government in relation to the Local Growth Fund and anticipate further guidance being received from UK Government in coming weeks. A further report will be brought to Cabinet following engagement with UK Government, informed by this process. 2. Background 2.1 The UK Government Spending Review on 11 June 2025 confirmed that from the financial year 2026/27, the Government would provide targeted, long-term funding to support local growth across the UK, completing the transition from the UK Shared Prosperity Fund (UKSPF). Through this the Government has launched four new funds: the Pride in Place Programme, the Pride in Place Programme Impact Fund, the Growth Mission Fund and the recently announced Local Growth Fund (LGF).
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2.2 North Ayrshire has received a £1.5m allocation under the Pride in Place Impact Fund two allocations of up to £20m each under the Pride in Place Programme, for Irvine under the former Plan for Neighbourhoods and for the Three Towns under the new Pride in Place Programme. These funds and the approach to the allocations have been considered through separate reports to Cabinet. 2.3 The Growth Mission Fund provides £240 million of capital from 2026/27 to 2029/30 to support local economic growth directly. This will invest in projects that enable local job creation and the economic regeneration of local communities. Two allocations totalling £40m were announced at the Autumn Budget Statement 2025 for Inchgreen in Inverclyde and Kirkcaldy in Fife, subject to business case approval. 2.4 The recently announced Local Growth Fund aims to provide targeted funding to boost economic growth and improve living standards. This supports the Growth Mission to improve living standards for working people by investing in the regions that contain the areas with the lowest Real Disposable Income (RHDI) per capita. The Fund is targeted at regional projects which will drive economic growth aligned to the broad investment themes identified as infrastructure investment, business support and skills development. 2.5 The allocation methodology ranked the thirty-two Scottish Local Authorities according to RDHI per capita, averaged over the latest three years of available data. Each Local Authority was then matched to their corresponding Regional Economic Partnership (REP). The first five unique Regional Economic Partnerships for the Local Authorities with the lowest RDHI were then categorised as eligible. The funding was then allocated across the eligible REPS in proportion to their population. Funding has been allocated at a regional level to enable strategic decision making and maximum growth impact. 2.6 The eight Scottish REPs and their associated allocations are summarised as follows: Regional Economic Partnership Allocation Ayrshire: East Ayrshire, North Ayrshire and South Ayrshire. £11.8m Edinburgh & South-East Scotland City Region: City of Edinburgh, East Lothian, Fife (also part of Tay Cities), Midlothian, Scottish Borders (also in South of Scotland) and West Lothian. £37.8m Forth Valley: Stirling, Falkirk and Clackmannanshire. £9.8m Glasgow City Region: Glasgow City, East Dunbartonshire, East Renfrewshire, Inverclyde, North Lanarkshire, Renfrewshire, South Lanarkshire, West Dunbartonshire £60.9m Highlands and Islands: Argyll and Bute, Highland, Moray Na h-Eileanan Siar (Western Isles), Orkney Islands and Shetland Islands Nil North East: Aberdeen City and Aberdeenshire Nil South of Scotland: Dumfries and Galloway and Scottish Borders (also part of ESES) Nil Tay Cities: Angus, Dundee City, Fife (also part of ESES) and Perth & Kinross £19.5m Total £139.8m
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2.7 The UK Government has advised that it intends to work with the five eligible REPs to identify how the regional allocations can be deployed for maximum impact. Further information is anticipated in Quarter One of 2026 on the investment themes, interventions framework and governance and delivery arrangements. This will include confirmation of the approach to delivery through Regional Economic Partnerships. 2.8 The LGF completes the UK Government’s transition from the UK Shared Prosperity Fund (UKSPF). This was the UK Government’s replacement for the European Social Fund (ESF) and European Regional Development Fund (ERDF) funding and a significant component of its support for places across the UK. 2.9 The UKSPF commenced in 2022/23 and was focused on three priorities of People and Skills, Supporting Local Business and Communities and Place. It provided an initial three financial years of support and a final transition year in 2025/26. The Prospectus encouraged Local Authorities to adopt a regional approach to their Investment Plans, focusing on the existing Regional Partnerships. The approach progressed was that the Ayrshire authorities, like the majority of Local Authorities, would submit individual Investment Plans that reflected a regional consistency in approach. 2.10 In the final transitional year of the UKSPF, the three Ayrshire Authorities received a total of £6,354,307 comprised of the following allocations. This represented a 17% reduction in North Ayrshire and 40% reduction in East Ayrshire and South Ayrshire on 2024/25 allocations. Local Authority Total Allocation Capital Allocation Revenue Allocation East Ayrshire Council £2,001,256 £567,448 £1,433,808 North Ayrshire Council £2,697,397 £576,535 £2,120,862 South Ayrshire Council £1,655,654 £469,454 £1,186,200 Total £6,354,307 £1,613,437 £4,740,870 2.11 In North Ayrshire, the UKSPF has supported Employability and Skills and Business Support and Development services, alongside Regeneration project delivery since its inception. Similar approaches were adopted in East and South Ayrshire Councils. The reduction in funding and increase in the proportion of capital allocation therefore has the potential to have a significant impact on the delivery of economic development activities across the region. 2.12 The allocations across the three investment priorities agreed by Cabinet on 18 February 2025 and the activities supported are summarised as follows: Investment Priority Activities Supported 2025/26 Allocation People & Skills Partial and full funding of key Employability and Skills programmes, Essential Skills programme and associated staff costs. £1,618,439 Supporting Local Business Partial and full funding of Business Support and Development grant and consultancy support for small to £296,714
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medium enterprises and a contribution to associated staff costs. Communities & Place Delivery of the Communities and Place competitive community grant fund, Participatory Budgeting and Council led regeneration projects. £674,348 (inclusive of £576,535 capital) Administration Costs (4%) Staff and other administration costs including Programme Manager and Monitoring and Compliance Officer for the programme. £107,896 Total £2,697,397 2.13 The £11.8m Ayrshire LGF allocation over the next three financial years is summarised below. This equates to a 38% reduction in the overall allocation on the 2025/26 UK SPF levels. The allocation includes a higher proportion of capital than revenue in comparison to previous years, increasing from 25.4% in 2025/26 at an Ayrshire wide level to 74.6% of the overall regional allocation. Furthermore, the allocation reduces across the three financial years. This therefore has implications on the extent and types of projects and activities that the Fund can be used to support. Revenue allocation Capital Allocation Total Allocation 26/27 27/28 28/29 26/27 27/28 28/29 26/27 27/28 28/29 £1.3m £1.3m £0.9m £3.1m £2.9m £2.3m £4.4m £4.2m £3.2m 2.14 The Economic Development, Growth and Regeneration Service is currently reviewing the overall funding position in relation to the activities previously delivered under the UKSPF. The UKSPF allocation partially and fully funded these activities and associated posts alongside core Council budgets and Scottish Government funding sources including No One Left Behind and Place Based Investment Programme. This process will therefore include investigating and establishing the workforce and service delivery implications and alternative funding and delivery approaches. It will also be informed by the further information awaited from UK Government and engagement with the Regional Economic Partnership. 2.15 A further report will be brought to Cabinet following the receipt of further guidance on the Fund from UK Government. 3. Proposals 3.1 That Cabinet: a) Notes the update on the Local Growth Fund; and b) Agrees to receive further updates following engagement with the UK Government. 4. Implications/Socio-economic Duty Financial 4.1 The £11.8m regional allocation under the LGF represents a 38% overall reduction in the UKSPF allocations received across the three Local Authorities in 2025/26. The allocation does not define a specific allocation for each Local Authority area and provides a reducing level of support over the three financial years. The reduction in
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funding and increase in the proportion of capital allocation has the potential to have a significant impact. The Economic Development, Growth and Regeneration Service is currently reviewing the overall funding position in relation to the posts and associated activities previously funded by UKSPF. This process will therefore include investigating and establishing the workforce implications, alternative funding and delivery approaches. The financial implications will be fully assessed, informed by the further detail on the Fund currently awaited from the UK Government. Human Resources 4.2 Several posts within Economic Development and a small number of temporary posts within Connected Communities are either partially funded or fully funded by the UKSPF alongside core Council budgets and Scottish Government funding sources such as No One Left Behind. Furthermore, the Fund also supports a range of third sector and community organisations and their activities. The Economic Development, Growth and Regeneration Service is currently reviewing the overall funding position in relation to the posts and associated activities previously funded by UKSPF. This process will therefore include investigating and establishing the workforce implications, alternative funding and delivery approaches. Staff resource will be required to support the delivery of the new LGF. The cost of this will require to be partially met through the funding award and through additional council resources as appropriate. The workforce implications will be fully assessed through the review process and be fully considered through the development of the regional approach to the LGF, informed by the further detail on the Fund currently from the UK Government. Legal 4.3 The legal implications will be fully considered through the development of the regional approach to the LGF, informed by the further detail on the fund currently from the UK Government. Equality/Socio-economic 4.4 The Equality and Socio-economic implications will be fully considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. Climate Change and Carbon 4.5 The climate change and carbon implications will be fully considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. Key Priorities 4.6 The implications for key priorities will be fully considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government.
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Community Wealth Building 4.7 The Community Wealth Building implications will fully be considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. Islands Communities Impact Assessment (ICIA) 4.8 The potential for island communities implications will be will fully be considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. United Nations Rights of the Child (UNCRC) 4.9 The potential for UNCRC implications will be will fully be considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. Consumer Duty 4.10 The potential for Consumer Duty implications will be will fully be considered through the development of the regional approach to the LGF, informed by the further detail on the Fund from the UK Government. 5. Consultation 5.1 The confirmation of the £11.8m allocation highlighted that the UK Government intends work with regional partners to identify how the allocation can be deployed for maximum impact. The requirements for wider consultation will be considered when this further detail is available and in line with UK Government requirements and best practice. Details of this engagement and further information on the Fund are anticipated in Quarter One of 2026. RUSSELL McCUTCHEON Executive Director (Place) For further information please contact Louise Kirk, Head of Service, Economic Development, Growth and Regeneration, on 01294 324766. Background Papers Cabinet Report: UK Shared Prosperity Fund, 23 August 2022 Policy Advisory Panel Report: UK Shared Prosperity Fund – Communities and Place, 18 April 2023 Cabinet Report: UK Shared Prosperity Fund – Communities and Place Fund, 30 May 2023 Cabinet Report: UK Shared Prosperity Fund – Communities and Place Fund Update, 23 January 2024 Cabinet Report: UK Shared Prosperity Fund 2025/26, 18 February 2025