Debate contribution: Local Growth Fund

Debate contribution by Mr John O'Dowd on 21 October 2025.

MLA

Mr John O'Dowd

Party at the time

Sinn Féin

Date

21 October 2025

Type

Debate contribution (made as a minister)

Business

Private Members' Business

Heading

Local Growth Fund

Assembly identifier

Official Report component 5197414

Read the official Assembly record

Text

Thank you, a Leas-Cheann Comhairle.

I fully support the motion and welcome the opportunity to respond to the debate. Many Members have rightly recognised the positive contributions that the European social fund and the European regional development fund made in supporting the community and voluntary sector over many years. Those EU funds were central to tackling economic inactivity, promoting inclusion and building resilience in our communities, as well as to supporting local businesses and rural development. Their loss in the aftermath of Brexit was deeply felt, particularly in the community and voluntary sector. The Ministry of Housing, Communities and Local Government presented the Shared Prosperity Fund as a replacement fund for those lost EU funds, but it was never an adequate solution. Although there have been some benefits from it, the Shared Prosperity Fund has failed to match the ambition and scale of the EU programmes that it replaced. There was a reduction in scope and funding. We received an average of £65 million a year of European funding, with local delivery coming via Departments.

The Shared Prosperity Fund — the intended replacement — was a reduction of, on average, £35 million a year, with centralised Whitehall delivery. That did not respect our unique system of government or our equality legislation. Despite its limitations, it provided vital support, particularly to our community and voluntary sector. Through its interventions, it also supported the work of the Department for Communities, the Department for the Economy, the Department of Health and the Department of Justice. From data gathered by NICVA, we know that, over the 2022-24 period, that funding enabled 18 projects to deliver economic inactivity interventions in every council area, and 64 organisations to deliver tailored community-based interventions and support to almost 24,000 individuals. Those projects focused on those furthest removed from the labour market, those with disabilities, health conditions and caring responsibilities, older people and young people facing multiple barriers to employment. The figure of almost 24,000 people is not just a number: it represents lives changed, futures rebuilt and communities strengthened. The funding also supported 650 staff who delivered person-centred, wrap-around support in every council area. The Ministry of Housing, Communities and Local Government implemented a transition year in 2025-26 so that the vital services that were funded under the Shared Prosperity Fund could continue, while, supposedly, a replacement programme could be developed. The lack of clarity from that Ministry regarding the local growth fund is creating deep uncertainty, particularly for the community and voluntary sector, which faces another impending cliff edge in funding due to the lack of certainty and the reduction in funding. After the spending review in June, it was announced that we would be allocated £46 million a year over three years. We were also told that the Executive would be a partner in delivering the local growth fund. Unfortunately, that partnership has not materialised nor have the Labour Government honoured their manifesto commitment to restore control over structural funds to local representatives. Despite sustained efforts, we are back to a situation that has been deeply depressing and all too familiar in recent years. I secured an Executive position on the future local growth fund in March this year. We explored some of the shortcomings in the Shared Prosperity Fund approach and how the local growth fund could be better. That position detailed a number of principles: funding must be long term and sufficient in value; there must be co-design with partners; structures must be efficient and accessible; interventions must be in line with our Programme for Government; importantly, lessons — positive and negative — must be learned from what went before; and time is critical. We needed to be able to move quickly to prevent another funding cliff edge. Those principles were shared with British Ministers in March but have not been factored into decisions taken in Whitehall. Despite months of pressing the Government, I still have little information about the local growth fund. The scant information that I have does not paint a promising picture. The £46 million a year will be heavily skewed towards capital funding. The Shared Prosperity Fund was three quarters resource funding, but the local growth fund will be only one third resource funding. Earlier this month, I met representatives of the community and voluntary sector. I listened to their concerns, and their message was clear. The significant reduction in the resource budget for this funding will severely impact on the community and voluntary sector's ability to deliver vital services, particularly for those furthest away from the labour market. Resource funding is needed to deliver interventions, including for economic inactivity, through the community and voluntary sector. That shift will disrupt or potentially end the very programmes that have employed 650 staff and helped thousands into work and training. Co-design and proper, meaningful engagement are vital, and the British Government need to engage contingency arrangements. I note the recent announcement that the Welsh Government will be provided with the spending power to use the local growth funding according to an investment plan delivered by the Welsh Government. That is a good outcome for Wales. It clearly shows that there is no structural barrier to fulfilling the commitment made in the Labour Party manifesto: to restore control of this funding to devolved Governments. I found myself in full agreement with the Secretary of State for Wales, Jo Stevens, when she stated:

"Decisions about how this money is spent are best made by people in Wales".

The same principle applies here. Decisions about spending are best made by people who live here. A fully local fund would have been the optimal solution, but Whitehall has run down the clock. What comes next must be managed carefully to mitigate, as far as possible, negative impacts on the community and voluntary sector. That will require hard work, good faith and close cooperation here and in London — the partnership that we were promised. Frankly, it does not make sense for Whitehall Departments to implement, manage and run such funds here. It creates duplication, adds a further layer of bureaucracy and does not align well with our priorities. It is not the way to get best value for money, especially when the Treasury itself tells us that money is so tight. When I met the Chief Secretary to the Treasury, James Murray, on Friday, I raised the issue of lack of recognition across Whitehall of the different needs in the North compared with those in Britain. I also spoke about our different governmental landscape and how that requires bespoke arrangements. I outlined the need for resource funding to achieve local growth and pressed him for flexibility to allow the Executive freedom to spend the local growth allocation in a way that best meets our needs. Earlier this month, I met Hilary Benn and stressed the urgency of the issue. I was very clear that economic inactivity is a significant barrier to local growth here and that resource funding is needed more than capital funding to tackle it. During our meeting, Hilary Benn undertook to seek a joint meeting with the Secretary of State for Housing, Communities and Local Government. As a result, I will meet him and Steve Reed tomorrow. I will be pressing Mr Reed to work towards a sensible outcome. To conclude, the Assembly can today send a clear message to Westminster that our communities deserve better. The community and voluntary sector has proven its value, its reach and its impact. It must not be left behind due to Whitehall indecision and funding redesigns that ignore local realities. Our local communities deserve local solutions that are aligned to local challenges and local priorities. If the British Government do not provide us with clarity, flexibility and more resource funding, we risk losing front-line jobs, vital services and the infrastructure that connects our most vulnerable citizens to opportunities. That is not an acceptable position. I stand firmly behind the motion. I encourage fellow Members to do likewise and send a united message to the Government that the time for dithering and delay is over. Clarity is needed, and needed now. Our community and voluntary sector and our communities deserve better.

1,364 words. Text as published by the Northern Ireland Assembly.

Assessment

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Assessed 21 October 2026 at 13:32 UTC by jev-1.13.0 (requested as typesafe/jev) under rubric 2026.10-r9, methodology 1.9.

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