Policy paper

Local Growth Fund: Place selection and allocation methodology note

Published 26 November 2025

Applies to England

Introduction

This note sets out the methodology used to allocate the Local Growth Fund across England. It sets out the core principles that underpin the approach taken and then outlines the process for selecting places and determining allocation.

Core principles

The Local Growth Fund allocation methodology is guided by a set of core principles:

• Objectives: The Local Growth Fund supports the Kickstarting Economic Growth Mission by addressing regional disparities in productivity. It provides strategic flexible funding for investment into infrastructure, business support and skills development.
• Geographic levels and institutions: Funding is delivered through the highest level of local governance to enable strategic decision-making across interconnected ecosystems of firms, institutions, supply chains, and labour markets. MSAs are used to reflect functional economic areas (FEAs) with sufficient scale to support agglomeration benefits. These areas have existing Local Growth Plans and established governance and are recognised in the Industrial Strategy as the cornerstone of place-based policy.
• Targeting: Targeting specific places where untapped potential exists is essential to achieving the intended policy objectives within the constraint of the overall funding envelope. Productivity varies significantly by geography due to differences in infrastructure, skills and business density. Research supports this approach with bodies such as the Academy for Social Sciences, What Works Centre for Economic Growth, and Centre for Cities recommending targeting funding to regions with catch-up potential.

Methodology overview

The methodology comprises three stages informed by these overarching principles:

1. Place Selection
2. Quantum
3. Allocation

Stage 1: Place selection

Places are identified based on their alignment with the core principles. Places must have had an existing Mayoral Strategic Authority at the point when the fund was announced. All existing MSAs with a GDP per head below the UK average are eligible to receive funding through the Local Growth Fund. The latest 2023 ONS data on GDP per head for MSAs is used to make this assessment. 11 MSAs are eligible under these criteria.

Stage 2: Quantum

The total quantum of funding for allocating across the recipient places per year, split by RDEL and CDEL is (rounded to nearest £ million):

	RDEL			CDEL				TDEL
Year	26/27	27/28	28/29	26/27	27/28	28/29	29/30	26/27	27/28	28/29	29/30
Total Funding (£m)	£151	£135	£111	£50	£76	£151	£227	£202	£211	£262	£227

Totals may not match due to rounding.

Stage 3: Allocation

This funding is allocated across the 11 eligible MSAs in proportion to their population. The latest 2024 ONS population data for each MSA is downloaded from NOMIS (downloaded 01/10/2025) and aggregated to give a total for the 11 MSAs. Each MSA’s percentage of the total is then calculated and the funding for each year allocated in proportion to the calculated percentage.

The final allocations (rounded to nearest £ million) for each MSA are:

	RDEL			CDEL				TDEL
Mayoral Strategic Authority	26/27	27/28	28/29	26/27	27/28	28/29	29/30	26/27	27/28	28/29	29/30
East Midlands	£18	£16	£13	£6	£9	£18	£27	£24	£25	£31	£27
Greater Lincolnshire	£9	£8	£6	£3	£4	£9	£13	£12	£12	£15	£13
Greater Manchester	£24	£21	£17	£8	£12	£24	£36	£32	£33	£41	£36
Hull and East Yorkshire	£5	£4	£4	£2	£2	£5	£7	£7	£7	£9	£7
Liverpool City Region	£13	£11	£9	£4	£6	£13	£19	£17	£18	£22	£19
North East	£16	£14	£12	£5	£8	£16	£24	£22	£23	£28	£24
South Yorkshire	£11	£10	£8	£4	£6	£11	£17	£15	£16	£20	£17
Tees Valley	£6	£5	£4	£2	£3	£6	£8	£8	£8	£10	£8
West Midlands	£24	£21	£18	£8	£12	£24	£36	£32	£33	£42	£36
West Yorkshire	£19	£17	£14	£6	£10	£19	£29	£26	£27	£33	£29
York and North Yorkshire	£7	£6	£5	£2	£3	£7	£10	£9	£9	£12	£10
Total	£151	£135	£111	£50	£76	£151	£227	£202	£211	£262	£227

Totals may not match due to rounding.