The Local Growth Fund is the UK Government scheme replacing the UK Shared Prosperity Fund (UKSPF) from 1st April 2026. It is intended to support local growth across Scotland, Wales and Northern Ireland over the next three years. In Northern Ireland, however, concern has centred on how the funding is structured and what that means for frontline delivery.

Voluntary sector bodies in Northern Ireland say funding for economic inactivity support here is falling from around £25m a year to £9.2m, a 64% cut, with the new model weighted 70:30 in favour of capital over revenue. That matters because employability, mentoring, mental health and inclusion services are labour-intensive. They depend on people, local delivery and trusted relationships, not simply physical assets.

This is particularly significant for our region. DCSDC has the highest economic inactivity rate in Northern Ireland at 35.2%. At a time when employers need more people supported into work, cutting the services that help those furthest from the labour market moves in the wrong direction.

The Executive has responded publicly in firm terms. It said the current position is “neither sustainable nor fair”, warned that vital services are at risk, and called for a more realistic resource allocation. Westminster, by contrast, has so far held the line, arguing that the Executive could use part of its wider Treasury settlement to help bridge the gap.

If these services contract, the effect will not stop with the voluntary sector. It will be felt in the wider labour market, in workforce participation, and in the region’s ability to support inclusive growth.

Takeaway

This is not just a funding issue for service providers, it is a regional economic issue that could directly affect labour market participation and the North West’s long-term growth prospects.