Regional Balance fund

Having considered council and other stakeholder views, the Minister decided on the following formula to distribute funding to councils in respect of the 11 Local Economic Partnerships (LEP):

• 30% - allocated equally to all councils  
• 30% - based on productivity performance measured by output per job
• 40% - based on peripherality, based on small area classifications as per the OECD’s regional typology methods.

This would provide councils with the following allocations in respect of their LEP: 

	Base 30% (£000)	Productivity 30% (£000)	Peripherality 40% (£000)	Total 1 Year* (£000)	Total 3 Year (£000)
Antrim and Newtownabbey	409	214	333	956	2,868
Belfast	409	214	333	956	2,868
Lisburn and Castlereagh	409	428	333	1,170	3,510
Mid Ulster	409	214	666	1,289	3,867
Ards and North Down	409	642	333	1,384	4,152
Mid and East Antrim	409	428	666	1,503	4,509
Armagh City, Banbridge and Craigavon	409	428	666	1,503	4,509
Fermanagh and Omagh	409	428	666	1,503	4,509
Newry, Mourne and Down	409	428	666	1,503	4,509
Causeway Coast & Glens	409	428	666	1,503	4,509
Derry City and Strabane	409	642	666	1,717	5,151

*if funding was split in equal amounts across three years. Note: engagement is ongoing on the deliverable spend profile across the three year period.

The productivity element of the formula is calculated based on output per job, the most recent figures of which are from 2022. This is split three ways: those above the NI average, those between the average and 10% below, and those 10% below.

The peripherality measure is a contextual rather than performance measure. This measure is based on the OECD Regional Typology and councils are separated into two groups: peripheral and non-peripheral.

The rationale for each element is as follows:

Base amount

Base amount divided equally: there is recognition that there is a level of work that all partnerships will need to do and a common need across all council areas. The options of a 15% base or 30% base were tested with councils. No one option was more popular than the other. The Minister decided on the 30% option to ensure that every partnership would have the basic resources they need. It will be for the partnerships to use this funding, and although an element of this could be used to fund staff in councils to support the partnership, this does not indicate that the department expects councils to spend 30% on administration costs. Rather this seeks to encourage councils to build ongoing capacity and capability to support the advancement of local economic projects and engagement with NI departments and other economic stakeholders going forward.

Productivity

Productivity performance has a pervasive positive impact on a range of other indicators including employment rate and median wages. The relationship of other important indicators to one another is not as straightforward; for example, increasing median wages would not necessarily increase the employment rate and vice versa. As such, productivity performance is identified as an important measure for inclusion which will contribute strongly towards the objectives set out in the Sub-Regional Economic Plan:

• Sub-Regional Economic Plan

Peripherality

A contextual measure is required to provide some additional information around the challenges facing different areas. These include lack of access to peer or knowledge networks as well as distance from markets. People-centred interventions such as labour market partnerships tend to use population as a contextual measure. For this place-centred initiative, the spatial context of economic development is an important context for future performance. The OECD Regional Typology classification systems provides two ways of looking at this, a degree of urbanisation within an area and one based on metropolitan/remote area status. These have been used in tandem to produce a composite measure of council area peripherality.