From a top-level perspective, regeneration funding looks set to fall significantly over 2026-2027, with a 43.7% decrease from roughly £62 million to £35 million (see below chart for a year-on-year comparison):
Although the £12m repayment of an outstanding SPRUCE loan means the overall regeneration budget may yet increase, there is no clarity (or assurance) on whether this will happen.
This overall reduction looks to be driven primarily by discontinuing the Investing in Communities Fund – with its second round of projects scheduled to end in 9 weeks. Although no continuation has yet been confirmed, SURF firmly believes that this vital regeneration funding must be safeguarded, and we have already heard from several organisations in the SURF network concerned about the continued provision of key services and projects.
SURF has written to the Deputy First Minister to gain clarity on the lack of a successor to the ICF programme – stressing the impact of what this means in practice and for communities.
The ongoing volatility in the Regeneration funding landscape is also of particular concern, as sustainable, long-term funding – along with much-needed funding certainty for communities – is crucial to ensuring Regeneration receives backing from both a political and funding point of view. It should also be noted that spend in 2024-2025 was only £23.6 million, far below the initial budget of £60.7 million, reflecting the significant funding difficulties in that year, resulting in a reduced regeneration spend.
Although it is still possible that a continuation (or indeed a new funding programme) is yet to be announced, this lack of clarity and forward planning is concerning.
Alongside a new tranche of ICF funding, SURF would like to see regeneration funding restored, at a minimum, to previous levels (i.e. 2025-2026), taking account of inflation.
Lastly, the Spending Review currently has regeneration funding capped at £47 million in both 2027-2028 and 2028-2029, suggesting a lower baseline of regeneration funding in future years.
In our next 2026 Scottish Budget blog, we’ll focus on each of the four key themes in our recently published Manifesto for Regeneration.
If you have thoughts about this piece or would like to raise the impact of the budget on your organisation and work, please contact Augustijn van Gaalen, SURF’s Policy & Advocacy Manager, at augustijn@surf.scot.
