Guidance

UKSPF 2025-26 allocations: Methodology note

Updated 13 December 2024

Overview

As announced at Autumn Budget, the UK Shared Prosperity Fund will be extended for 2025-26 at £902 million.

A full list of allocations by lead local authorities are published here. The methodology by which these allocations were calculated is outlined in detail below.

Methodology

Overview

The original £2.6 billion for UKSPF for 2022-23 to 2024-25 was allocated in two stages; first, to England, Scotland, Wales, and Northern Ireland, and then distributed to lead local authorities within each part of the UK (except for Northern Ireland). Further information on previous allocations can be found here: UK Shared Prosperity Fund allocations: methodology note

The new allocation has 4 changes:

• Multiply:  for 2025-26 the Multiply programme will not continue as a specific, ringfenced programme.
• Change in core capital and revenue splits: The differences between the 2022-25 and 2025-26 transitional UKSPF quantum is largely comprised of a difference in core revenue funding. The total allocation for 2025-26 is £234 million capital and £668 million revenue, a higher proportion of capital compared to previous years.
• Pivot capital in England towards MCAs: £68 million of capital (12% of England’s £570 million national budget) will be reserved for MCAs. This will support MCAs with capital for early development of local growth plans and local priority investments.
• Targeting Deprivation: allocations have been adjusted to prioritise areas with the highest levels of deprivation, whilst ensuring funding in all lead local authorities is high enough to remain viable.

The transitional quantum has been allocated to places using the following steps:

Step 1: Set national quantums
Step 2: Capital allocation
Step 3: Revenue allocation
Step 4: Local authority level allocation
Step 5: Aggregate to lead local authority
Step 6: Reallocate reserved MCA budget

Step 1: Set national quantums

New national quantums have been calculated using the average nation shares for core UKSPF 2022-23 to 2024-25 as follows:

Nation	Total Core UKSPF 22-23 to 24-25 (1)	Core Quantum %
Scotland	£175 million	8.42%
Wales	£484 million	23.25%
Northern Ireland	£105 million	5.04%
England	£1,296 million + £22 million from floor (2)	63.28%
Total	£2,082 million	100.00%

(1) Some figures not exact due to rounding
(2) See step E6: UK Shared Prosperity Fund allocations: methodology note

The total allocation for 2025-26 is £234 million capital and £668 million revenue, a higher proportion of capital compared to previous years. Based on the total quantum of £902 million, the nation shares, and revenue/capital split, this gives the following national allocations:

Nation	Quantum %	National Allocation	Capital	Revenue
Scotland	8.42%	£75,970,095	£19,708,428	£56,261,666
Wales	23.25%	£209,732,954	£54,409,658	£155,323,296
Northern Ireland	5.04%	£45,488,433	£11,800,769	£33,687,664
England	63.28%	£570,808,519	£148,081,146	£422,727,373
Total	100.00%	£902,000,000	£234,000,000	£668,000,000

Step 2: Capital allocation

In Scotland and Wales, capital has been allocated based on historical local authority core UKSPF proportions. Each local authority receives an amount equal to their historical share multiplied by the new capital total.

In England, £68 million of capital (12% of England’s £570 million national budget) will be reserved for MCAs to support the early development of Local Growth Plans and local priority investments. This shifts some capital funding in England towards MCAs. The redistribution process is detailed in Step 5.

Step 3: Revenue allocation

Revenue is allocated across all local authorities with the following considerations:

a) protecting more deprived areas based on IMD b) limiting total losses c) scaling remaining revenue to achieve national quantums

a) protecting more deprived areas based on IMD

Allocations have been adjusted to prioritise areas with the highest levels of deprivation, while ensuring funding in all places is high enough to remain viable. To measure the level of deprivation in individual areas these allocations used the most recent Index of Multiple Deprivation (IMD) for each nation.

• In England, the 2019 Index of Multiple Deprivation has been used. The 2020 population estimates for small areas (based on the 2011 census) were used to calculate a population-weighted average IMD score on local government geographies. First, the proportion of each local authority’s population in its constituent lower super output area (LSOA) was determined. Since more recent releases use the new 2021 LSOAs, which differ from the 2019 IMD geography, the 2011 LSOAs were used as they align directly with the IMD data. Local authority boundary changes between 2019 and 2023 were also updated accordingly. A weighted score was then calculated by multiplying the IMD score for each LSOA by its share of the local authority population. These weighted scores were summed across local authorities, providing an average score for each local authority that accounts for population differences among LSOAs. Finally, the scores at the local authority level were used to create percentiles (from 1-100) and identify the 20% local authorities with the highest levels of deprivation.
• In Wales, the 2019 Welsh Index of Multiple Deprivation has been used. Local authorities were ranked by the proportion of their LSOAs in the top 30% most deprived. Finally, the scores at the local authority level were used to create percentiles (from 1-100) and identify the 20% local authorities with the highest levels of deprivation.
• In Scotland, the 2020 Scottish Index of Multiple Deprivation (SIMD) has been used. Due to data availability the process differed slightly but adhered to the same principles. The lower geography was the Scottish Data Zone, and the higher geography was the council area. Since the SIMD does not publish scores, the rank of each Data Zone was used instead. The population data was sourced from the National Records of Scotland 2022 mid-year population estimates for Data Zones, the most recent data release at the same geography as the SIMD. The ranks were weighted by data zone population shares before summing the results across council areas. These SIMD scores were then converted into percentile ranks as was the case in England. Finally, the scores at the local authority level were used to create percentiles (from 1-100) and identify the 20% local authorities with the highest levels of deprivation.

Local authorities identified as being in the top 20% for highest levels of deprivation are prioritised. This results in 60 local authorities in England, 6 in Scotland, and four in Wales that benefit from prioritisation. To these 70 local authorities, we apply a prioritisation adjustment factor. This protects those with the highest levels of deprivation relative to elsewhere.

(3) change in revenue (%) = 1 - ((New Total Revenue (£))/(Historic Average Revenue (%) × 24 - 25 Total Revenue (£) )) = 1 - (£668 million / (82.14% × £1,310 million)) = 37.92%

b) limiting total losses

An additional protection is applied to areas facing the most significant reductions in UKSPF quantum. For all local authority allocations, a £35 million cap is applied to total losses (including Multiply, capital and revenue) compared to a modelled entitlement of historic core and Multiply proportions, and a total quantum equivalent to the 2024-25 quantum. If a local authority hits this cap, their revenue cut is reduced such that they lose no more than £35 million against this benchmark.

c) scaling remaining revenue to achieve national quantums

For local authorities not captured in steps (a) and (b), within each nation their revenue allocation is proportionally scaled by an adjustment factor (split by nation) to achieve the final quantums. This allocates the highest possible level of revenue in each local authority given the deprivation prioritisation, the total loss limit, and quantums. For each of these local authorities, their core revenue is multiplied by the following national adjustment factor:

(4) Where 40.94% is the point at which the Cornwall and Isles of Scilly hits the cap

Within each nation, where local authorities are not prioritised (not identified as being in the top 20% for highest levels of deprivation), nor hit the loss cap, they are scaled by their national adjustment factor. For example, a Welsh local authority not identified as being in the top 20% for highest levels of deprivation in Wales, which doesn’t hit the loss cap, is scaled by 0.91, whereas local authority authorities with high levels of deprivation in Scotland would be scaled by 1.29.

Step 4: Local authority level allocation

The final allocation in each area comprises these two components: capital and revenue.

Capital

Capital is calculated as per step 2. The capital figures from step 1 are inputted directly to get the capital allocations:

Nation	Total capital
England	£79,584,123 (5)
Scotland	£19,708,428
Wales	£54,409,658

(5) Excludes 12% total quantum (£68 million) top slice taken out of English allocation (£570 million). Full English Capital is £148 million.

In Scotland and Wales, capital was allocated based on historical local authority core UKSPF proportions. Each local authority receives an amount equal to their historical share multiplied by the new capital total, such that:

Welsh local authority capital allocation (£) = local authority historic core allocation (%) x £54 million

Scottish local authority capital allocation (£) = local authority historic core allocation (%) x £20 million

In England, £68 million of capital (12% of England’s £570 million national budget) will be reserved for MCAs to support the early development of Local Growth Plans and local priority investments, such that:

English local authority capital allocation (£) = local authority historic core allocation (%) x (£148 million - £68 million)

English local authority capital allocation (£) = local authority historic core allocation (%) x £80 million

Revenue

Revenue is calculated as per step 3. Depending on whether a specific local authority is identified as one of the 20% of local authorities with the highest levels of deprivation within each nation, a prioritisation adjustment factor or a national adjustment factor is applied. If the local authority hits the loss cap, it has a specific adjustment factor calculated. The revenue/capital figures from Step 1 are directly inputted to provide local authority allocations:

Nation	Group	Total revenue	Adjustment Factor
England	Prioritisation	£             422,727,373	1.29
England	National	£             422,727,373	0.83
Scotland	Prioritisation	£                56,261,666	1.29
Scotland	National	£                56,261,666	0.89
Wales	Prioritisation	£             155,323,296	1.29
Wales	National	£             155,323,296	0.91

For prioritisation adjusted and nationally adjusted local authorities in England:

Prioritisation adjusted English local authority revenue allocation (£) = local authority historic core allocation (%) × 1.29 × £423 million

Nationally adjusted English local authority revenue allocation (£) = local authority historic core allocation (%) × 0.83 × £423 million

For prioritisation and nationally adjusted local authorities in Wales:

Prioritisation adjusted Welsh local authority revenue allocation (£) = local authority historic core allocation (%) × 1.29 × £155 million

Nationally adjusted Welsh local authority revenue allocation (£) = local authority historic core allocation (%) × 0.91 × £155 million

For prioritisation and nationally adjusted local authorities in Scotland:

Prioritisation adjusted Scottish local authority revenue allocation (£) = local authority historic core allocation (%) × 1.29 × £56 million

Nationally adjusted Scottish local authority revenue allocation (£) = local authority historic core allocation (%) × 0.89 × £56 million

Total allocation

Allocations can therefore be written in full as:

Local authority allocation (£) = Local authority capital allocation (£) + local authority revenue allocation (£)

Local authority allocation (£) = (Local authority historic core allocation (%) × Nation’ s capital total (£)) + (Local authority historic core allocation (%) × Relevant adjustment factor × Nation’ s revenue total (£))

The following table illustrates how the local authority allocations work for different places:

Example 1. An English local authority identified as being in the top 20% for highest levels of deprivation in England, and with a historic proportion of 1.30%, would be allocated as follows:

Prioritisation adjusted English local authority allocation (£) = (1.30% × (£148 million - £68 million))+(1.30% × 1.29 × £423m)

Prioritisation adjusted English local authority allocation (£) = (1.30% × £80 million) + (1.30% × £544 million)

Prioritisation adjusted English local authority allocation (£) = (£1 million) + (£7 million)

Example 2. A Welsh local authority not identified as being in the top 20% for highest levels of deprivation in Wales, and not hitting the loss cap, with a historic proportion of 4.69%, would be allocated as follows:

Nationally adjusted Welsh local authority allocation = (4.69% × (£54 million)) + (4.69% × 0.91 × £155 million)

Nationally adjusted Welsh local authority allocation (£) = (4.69% × £54 million) + (4.69% × £141 million)

Nationally adjusted Welsh local authority allocation(£) = (£3 million) + (£7 million)

Example 3. Cornwall and Isles of Scilly, not identified as being in the top 20% for highest levels of deprivation in England, but hits the loss cap, would be allocated as follows:

Cornwall and Isles of Scilly allocation (£) = (9.83% × (£148 million - £68 million)) +(9.83% × 0.95 × £423m)

Cornwall and Isles of Scilly allocation (£) = (9.83% × £80 million) + (9.83% × £402 million)

Cornwall and Isles of Scilly allocation (£) =(£8 million) + (£40 million)

Step 5: Aggregate to lead local authority

Allocations are initially calculated at the local authority level and then aggregated to the relevant delivery authority where this is not at the lowest tier nor an individual authority (e.g. for MCAs). For example, the allocation of Hull and East Yorkshire is the sum of its two underlying local authorities. Cornwall and the Isles of Scilly are treated as a single geography for the purposes of UKSPF.

Step 6: Reallocate reserved MCA budget (England only)

After aggregating allocations at local authority level, Mayoral Combined Authorities (MCAs) receive an allocation from the £68.5 million reserved budget in proportion to their new allocation. This results in a 22% top-up for MCAs, paid entirely in capital. This approach allocates £28.3 million of additional capital to MCAs.

MCAs (incl GLA)	MCA reserved budget (capital only)	Total Allocation
Greater Manchester	£7,801,496	£43,215,615
South Yorkshire	£4,061,142	£22,496,292
West Yorkshire	£6,469,208	£35,835,534
Liverpool City Region	£4,632,553	£25,661,569
Tees Valley	£3,877,034	£21,476,445
West Midlands	£8,387,838	£46,463,600
Cambridgeshire and Peterborough	£793,110	£4,393,356
West of England	£734,148	£4,066,742
York and North Yorkshire	£1,585,532	£8,782,899
East Midlands	£4,543,961	£25,170,819
North East	£9,873,123	£54,691,184
Greater London Authority	£11,369,782	£62,981,782
Hull and East Yorkshire	£1,698,827	£9,410,481
Greater Lincolnshire	£2,669,268	£14,786,148

See a full list of allocations by lead local authorities