Policy paper

Local Growth Fund (Scotland): Place selection and allocation methodology note

Published 8 January 2026

Applies to Scotland

1. Introduction

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

2. Core principles

The Local Growth Fund - Scotland Regional Economic Partnership allocation methodology is guided by a set of core principles:

• Strategic Objectives: The Local Growth Fund supports the UK Government’s Growth Mission to improve living standards for working people by investing in the regions that contain the areas with the lowest Real Disposable Household Income (RDHI) per capita. It will provide strategic flexible funding for investment to drive economic growth, with details on investment themes and interventions to be set out in due course. 
• 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. Regional Economic Partnerships (REPs) are collaborations between local government, the private sector, education and skills providers, enterprise and skills agencies and the third sector to deliver economic prosperity across Scotland’s regions. REPs are used to reflect functional economic areas (FEAs) with sufficient scale to support agglomeration benefits.
• Targeting: Targeting 5 REPs which contain the areas with the lowest living standards (RDHI per capita) is essential to achieving the intensity of funding required for the intended policy objective of improving living standards for working people within the constraint of the overall funding envelope. RDHI per capita varies more significantly between local authorities than REPs and so is most suited to identifying the places most in need of investment to improve living standards.

3. Methodology overview

In Scotland, the allocation methodology identifies how much funding 5 Regional Economic Partnerships (REPs) shall receive under the programme. 

The REP allocation methodology follows 3 steps:

1. Place selection
2. Quantum
3. Allocation

3.1 Stage 1: Place selection

Each of the 32 Scottish Local Authorities are ranked according to RDHI per capita, averaged over the latest 3 years of available data (2021, 2022, 2023). RDHI per capita is calculated by applying final consumption expenditure deflators to Gross Disposable Household Income per capita.

Each Local Authority is matched to their corresponding REP(s) and the first 5 unique REPs for the Local Authorities with the lowest RDHI per capita are categorised as eligible. Where a Local Authority is part of two REPs, both REPs become eligible.

3.2 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 £0.1 million):

	RDEL			CDEL			TDEL
Year	26/27	27/28	28/29	26/27	27/28	28/29	26/27	27/28	28/29
Total Funding (£m)	£15.8	£15.5	£11.0	£36.3	£33.9	£27.4	£52.1	£49.4	£38.4

Totals may not match due to rounding.

3.3 Stage 3: Allocation

This funding is allocated across the 5 eligible REPs in proportion to their population. The latest mid-2024 population estimates for each Local Authority is downloaded from NRS and aggregated to give a total for the 5 REPs. Each REP’s percentage of the total is then calculated and the funding for each year allocated in proportion to the calculated percentage.

Local Authority and REP geographies aren’t co-terminus, and Local Authorities are considered to be wholly part of each REP they are included in. When making allocations, to prevent double counting, where a Local Authority is part of two REPs, the Local Authority’s population is split 50:50 between the two REPs when calculating each REP’s total population. 

The final allocations (rounded to nearest £0.1 million) for each REP are:

	RDEL			CDEL			TDEL
Regional Economic Partnership	26/27	27/28	28/29	26/27	27/28	28/29	26/27	27/28	28/29
Ayrshire Region	£1.3	£1.3	£0.9	£3.1	£2.9	£2.3	£4.4	£4.2	£3.2
Edinburgh & South East Region	£4.3	£4.2	£3.0	£9.8	£9.2	£7.4	£14.1	£13.4	£10.4
Forth Valley Region	£1.1	£1.1	£0.8	£2.6	£2.4	£1.9	£3.7	£3.5	£2.7
Glasgow City Region	£6.9	£6.7	£4.8	£15.8	£14.8	£11.9	£22.7	£21.5	£16.7
Tay Cities Region	£2.2	£2.2	£1.5	£5.0	£4.7	£3.8	£7.3	£6.9	£5.3

Totals may not match due to rounding.