Row over £38m cut to Welsh funding under new Local Growth scheme

First Minister admits settlement is “slightly smaller”

The Welsh Government confirmed it will launch a consultation later this month to decide how the money is spent. Ministers in Cardiff say the fund will be used to support skills, help businesses in key sectors such as health and AI, and tackle barriers to growth.

First Minister Eluned Morgan said the settlement represented around 22% of the UK‑wide fund and pledged it would “reach all parts of Wales”. She admitted, however, that the package was “slightly smaller” than the previous scheme, adding: “Let’s remember, we always knew there was a price to pay for Brexit.”

UK Government Welsh Secretary Jo Stevens said decisions about spending were “best made by people in Wales” and stressed that ministers in London were working with Cardiff to deliver growth and opportunity.

Kurtz: “Wales was promised more, not less”

Welsh Conservative Shadow Cabinet Secretary for Economy and Energy, Samuel Kurtz MS, said the change represented a broken promise to Wales.

“Under Labour, Wales was promised more funding, not tens of millions of pounds less,” he said.

“The Welsh Labour Government getting to hold the purse strings does not fill me with hope, as they routinely waste taxpayers’ money on vanity projects like the creation of more politicians or on non‑devolved areas like their pointless overseas embassies and Ugandan tree planting.

“This funding should be used to support struggling Welsh businesses who have had to contend with Labour Governments at both ends of the M4 hitting them with higher taxes.”

Plaid Cymru and Reform also weigh in

Plaid Cymru’s economy spokesperson Luke Fletcher MS said the new fund only “notionally” replaced the EU structural funds Wales lost after Brexit, warning that £500m over three years “falls far short of what’s required to tackle decades of underinvestment and deep‑rooted deprivation.”

A Reform UK Wales spokesperson also criticised the settlement, claiming Labour and Plaid Cymru were responsible for the poor state of the Welsh economy.

From EU billions to a smaller UK pot

Large parts of Wales qualified for EU structural funds during Britain’s membership, receiving around £375m a year. That support was replaced by the Shared Prosperity Fund, worth £585m over three years, but structured without direct Welsh Government control.

The new Local Growth Fund replaces that scheme, with a framework now agreed between the Labour UK Government and ministers in Cardiff. The £547m allocation will be split between capital spending on infrastructure and revenue for services, though the exact balance has not yet been confirmed.

The announcement comes ahead of the Welsh Government’s draft budget, due to be published on Tuesday. Ministers will need to secure support from another party in the Senedd to pass it early next year.

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