Question to the Wales Office:

To ask the Secretary of State for Wales, whether the Chancellor of the Exchequer has provided guidance to her Department on the split between revenue and capital funding for the Local Growth Fund in devolved nations.

As announced at the Spending Review, from 2026-27 the UK government will provide targeted, long-term local growth funding to support regional growth across the UK, completing the transition from the UK Shared Prosperity Fund (UKSPF). For the next three years, this funding will be at the same overall level in cash terms as under UKSPF in the current year in Wales.

My Department has been provided with the financial breakdown for the new Local Growth Fund, including the capital and revenue split. I have regular discussions with both UK and Welsh Government ministerial colleagues on how this funding will benefit communities the length and breadth of Wales.

Over the course of the Spending Review period, the Local Growth Fund will invest in a range of projects that drive growth through both capital and revenue funding – from infrastructure to supporting businesses and helping people find jobs and acquire new skills.

The Welsh Government is developing an Investment Plan for the Local Growth Fund in Wales, and there is currently a live consultation to inform priorities. Insights from the consultation exercise alongside learning from evaluations of previous programmes will help ensure that the Local Growth Fund delivers long-term, sustainable benefits for communities and complements other major programmes such as Pride in Place, City and Regional Growth Deals, Freeports and Investment Zones.

This new fund reinforces the strong collaborative relationship between the UK Government and Welsh Government. It will help create jobs and grow productivity, bringing benefit to every part of Wales. I am fully committed to ensuring that the transition to the new Local Growth Fund is as smooth as possible with sufficient flexibilities for local authorities to manage the change in capital and revenue funding. To this end, I have written a joint letter with Rebecca Evans MS, Welsh Government Cabinet Secretary for Economy and Planning to local authority leaders in Wales reassuring them that both governments are open to exploring opportunities for additional flexibilities within the parameters of the budget settlement and our shared responsibilities for managing public money. This will help local authorities manage the change while continuing to support local businesses and workers.