Slashed funding for Derry voluntary services raised in new NIAC report
The impact of reduced revenue funding for day-to-day voluntary and community services in Derry has been highlighted in a new report from the NI Affairs Committee.
The report warns the replacement of the UK Shared Prosperity Fund (UKSPF) with a new Local Growth Fund, which introduced a 70/30 split in favour of capital spending over resource spending in April 2026, has had a major impact on voluntary and community organisations in Derry.
"When we met with voluntary sector organisations in Northern Ireland, we heard that Northern Ireland’s needs were for revenue, rather than capital, funding, given the key role of the voluntary sector in providing support, and the lack of alternative support systems which in Great Britain were largely delivered by local authorities.
“They described support that would be withdrawn from vulnerable people and the pressure reduced funding places on the health, social and justice services.
“They were informed of the funding decision days before Christmas, resulting in redundancies and cuts to programming,” the report states.
The local voluntary sector has estimated the replacement of the UKSPF by the LGF reduced funding by 64 per cent from £25m per year to £9.2m in April 2026.
The PSNI in Derry raised concerns with NIAC about the impact the funding cut could have on crime and policing when the committee met the force locally in January.
"This is not the first time the sector has faced a period of uncertainty and a funding cut: it had a similar experience in transitioning from the preceding EU Social Fund to the UK Shared Prosperity Fund,” the report adds.
The committee says it has ‘repeatedly called for the capital-revenue split of the Local Growth fund to be reversed’ but been told by the Northern Ireland Office (NIO) that it will not be changed.
Elsewhere the report warns that the failure by the Executive to agree a budget is limiting its ability to tackle persistent barriers to growth.
These include inadequate digital connectivity, wastewater management, and road and rail infrastructure.
Tonia Antoniazzi MP, Chair of the NIAC, said: “Long-standing shortcomings in Northern Ireland’s vital physical and digital infrastructure are acting as a constraint to economic growth and preventing the many dynamic and innovative businesses we have in Northern Ireland from fulfilling their potential. The NI Executive needs to urgently get on with agreeing a budget so it can start properly breaking down these persistent barriers faced by businesses.
"The UK Government however also has a key role to play in ensuring Northern Ireland has a prosperous future. The new Secretary of State has pledged to focus on economic growth. He now has the chance to show that the UK Government has a clear and measurable vision for economic growth in Northern Ireland and that its voice is heard when it comes to making policy.
"There is clearly so much economic potential in Northern Ireland. It’s now up to the UK Government and NI Executive to work together to give businesses the best chance of success and ensure a flourishing future for the NI economy.”