Our response to the Welsh Government consultation on the Local Growth Fund (LGF)

January 8, 2026

In December 2025 DTA Wales submitted a formal response to the Welsh Government consultation Proposals for an approach to the UK Local Growth Fund in Wales. The consultation set out proposals for how the new Local Growth Fund will operate in Wales, including guiding principles, investment priorities, governance and delivery arrangements, and the transition from the Shared Prosperity Fund (SPF). In our response we sought to advocate on behalf of our members and the wider sector for the value of prioritising investment in social and community businesses.

The context

  • The Welsh Government plans to invest £547m in Wales from 2026–2029 through the Local Growth Fund.
  • The aim: to boost productivity and reduce economic inequalities.
  • It plans to: restore local decision-making, complimenting other regional investments and is to be co-designed with local partners, be evidence-based, and be monitored annually.
  • The Fund’s focus: infrastructure, business support, and skills & employment.

In brief, LGF’s Guiding Principles:

  • Deliver long-term outcomes and regional impact.
  • Empower local bodies (CJCs) to prioritise investments.
  • Integrate with other programmes to avoid duplication.
  • Be flexible, strategic, and multi-year.
  • Embed equality, sustainability, and Welsh language.
  • Promote collaboration across Wales, UK, and internationally.
  • Build capacity for delivery and transition.
  • Ensure transparency in reporting and decision-making.

A summary of DTA Wales’ response:

  • We support inclusive, sustainable and community-led economic development in Wales, with a focus on long-term outcomes, tackling inequality, and operating within social and ecological limits.
  • We emphasise the central role of social enterprises, community asset ownership and civil society, and believe these should be explicitly recognised and supported within funding priorities and guiding principles.
  • We call for a stable but proactive transition from SPF to the Local Growth Fund, including early support from 2026 to address planning, legal and capacity barriers for projects already in development.
  • We advocate for community-led delivery and decision-making, with funding approaches that are sector-informed, less top-down, capable of supporting multi-year activity, and that recognise the role of community businesses in strengthening the Welsh language.

Our response in detail

Our response reflects the experience of community businesses and social enterprises across Wales and focuses on how the Local Growth Fund could better support inclusive, sustainable and community-led economic development.

Guiding principles

We broadly support the proposed guiding principles for the Local Growth Fund, particularly their focus on long-term outcomes, sustainability, and tackling economic inequality. They could be strengthened by explicitly recognising the integration of government and regional funding to support social enterprise growth, reduce dependency risks, and maximise long-term impact.

Investment in community capacity, capability, and community-owned assets should also be considered as economic infrastructure, as it sustains local economic activity and development even where impacts are not immediately measurable.

If an additional principle could be introduced, it should ensure that local growth contributes to Wales’ social foundation and respects ecological limits, ensuring a future where no-one is left falling short on life’s essentials.

Socio-economic analysis

We agree that the key issues identified in the socio-economic analysis are broadly the right ones to focus on but believe there should be greater emphasis on the role of the social enterprise sector, which has a strong track record in addressing these challenges.

Our response highlights the contribution of social enterprises in areas including community energy, low-carbon transport, climate action, the circular economy and enterprises led by under-represented groups. We also suggest the analysis could more clearly recognise the social foundation of Wales, the ecological limits within which economic activity must operate.

More productive and competitive businesses

We support increasing the creation of enterprises with growth potential, including a focus on under-represented groups and community development. Social enterprises play a key role in inclusive economic development, job creation and innovation in marginalised communities, and we emphasise the importance of dedicated social enterprise business support for them that reflects their specific requirements.

Supporting people into work and increasing skills

We support prioritising action to reduce economic inactivity, particularly among young people, disabled people, women and people from ethnic minority backgrounds. Increasing participation among these groups expands the workforce, strengthens productivity and contributes to a more resilient economy.

Green infrastructure and energy efficiency

We recognise that transport, renewable energy generation and energy efficiency are closely interconnected and need to be addressed together. Our response highlights the importance of community-owned renewable energy schemes, which deliver greater regional benefit through local employment and reinvestment.

Where prioritisation is needed, we recommend targeted capital investment in areas of market failure to reduce fuel poverty and improve housing energy efficiency.

Local infrastructure to drive regional economies

We support prioritising improvements in local economic infrastructure, including transport, digital connectivity and community assets, across rural, coastal, urban and city areas. Alongside investment in new infrastructure, we highlight the importance of maximising the use of existing assets.

We emphasise the value of community asset ownership programmes and related support services in building community capacity, strengthening local economies and retaining value within communities.

Managing the transition from SPF to the Local Growth Fund

We support a stable transition from the Shared Prosperity Fund to the Local Growth Fund. To maximise outcomes, early 2026 resources should support projects in conception, including community asset transfer, peer mentoring, and planning for community energy and transport schemes.

Given the Fund’s four-year horizon, support must start immediately to overcome planning and legal barriers and prepare projects for 2027. Early investment in sector conduits and representative voices is also essential, as capacity within the social enterprise and community business sector is limited, ensuring grassroots perspectives inform decision-making.

National and regional investment and delivery

We agree that interventions should be nationally coordinated yet locally rooted. National support systems should enable collaboration between community businesses and social enterprises, rather than relying on top-down models. A meaningful share of the Fund should be allocated to community enterprise development and asset ownership, with sector-informed decision-making. Significant impact could be achieved with a relatively small, multi-year portion of the budget.

Monitoring, evaluation and the Welsh language

We support the proposed approach to monitoring and evaluation and note that engaging the Social Enterprise Stakeholder Group would help tailor it to social enterprises. We also highlight the Fund’s role in strengthening the Welsh language by supporting enterprises that embed Welsh in their services, which could be reinforced through funding criteria and targeted support.

Conclusion

We welcome the opportunity to respond to this consultation on behalf of our members and look forward to continued engagement as proposals for the Local Growth Fund are developed. We remain committed to supporting community businesses and social enterprises to play a central role in delivering inclusive, sustainable and community-led economic development across Wales.