The agreement commits both governments to work collaboratively with Islands Deal partners to deliver a deal focused on: placing the islands at the forefront of the transition to net zero; supporting growth in key sectors of opportunity such as tourism, food and drink, space and creative industries; and, supporting thriving, sustainable communities.

The Islands Growth Deal will capitalise on the Islands’ unique assets with an investment of £50m each from the Scottish and UK Governments and an anticipated £235m from project partners. The ten-year programme of investment has the ambitious target of creating up to 1,300 jobs and tackling the depopulation concerns facing many parts of the three island archipelagos.

Partners will now be working towards the development of Full Business Cases for approval by both governments, with the anticipation of funding being approved and released from 2022/23 onwards. 

The multi-million-pound investment will be shared across the following projects:

Leading the way to a low carbon future

• Islands Centre for Net Zero
• Scapa Flow Future Fuels Hub Project
• Outer Hebrides Energy Hub
• Shetland Clean Energy Project (inc in ICNZ)
• Dales Voe Ultra Deep Water Port

Supporting Growth and Future Industries

• Creative Islands Wellbeing
• Outer Hebrides Destination Development
• Orkney World Heritage Gateway
• Orkney Community Vertical Farm
• Shell-Volution
• Outer Hebrides Food and Drink Programme
• Shetland Space Innovation Campus
• Spaceport1

Thriving Sustainable Communities

• TalEntEd Islands programme
• Orkney Research and Innovation Campus
• Shetland Campus Redevelopment
• Outer Hebrides Campus Redevelopment
• Knab Redevelopment

Iain Stewart MP, parliamentary under secretary of state for Scotland, said: “Today we have signed a transformational deal which will bring jobs, investment and innovation to communities across all three island areas. 

“These exciting plans show the path to a fairer, more sustainable, more prosperous future as we build back better from the pandemic.

“The UK Government’s £50m investment will boost green jobs and innovation in: sustainable energy, health, tourism, food and drink, and decarbonisation.

“Across Scotland we have committed more than £1.5 billion to Growth Deals.” 

Speaking following the virtual signing, Michael Matheson, cabinet secretary for transport, infrastructure and connectivity, said: “I am pleased to be signing the Heads of Terms agreement for the Islands Growth Deal, confirming that the Scottish Government will invest £50m in the region over the next ten years to deliver sustainable growth and support economic recovery.

“The projects supported through this Deal will focus on retaining and attracting young people in our island communities, encouraging new visitors, boosting innovation and skills, growing key sectors like food and drink and the creative industries, and building the infrastructure and expertise needed to capitalise on renewable energy opportunities.

“The Deal will deliver projects shaped by local people and local priorities that will re-invigorate the island economies, create high value jobs and build strategically for their long term growth and prosperity.”

Cllr Roddie Mackay, leader of Comhairle nan Eilean Siar, said: “We are delighted to have reached this stage in the process, and to have secured this level of investment through the deal, which represents the highest per capita investment of any of the Scottish growth deals. Both UK and Scottish Government have recognised the significant assets and growth potential our islands have in areas such as renewable energy resource, food and drink, and tourism. Their commitment to invest in the Islands Deal projects will strengthen the contribution our islands make to the national economy, and help address the challenges our island communities face, particularly as we now emerge from COVID-19.”

Cllr James Stockan, leader of Orkney Islands Council, said: “The signing of this deal seals a significant opportunity for our three island areas to further showcase our promise, our worth and our uniqueness - not just within the United Kingdom, but to the rest of the world. The investment through this enhanced deal opens up a range of opportunities for growth that otherwise would not have been possible, of vital importance given these ongoing challenging times.

“The Deal today will help us harness our potential moving forward, not just as a single island authority, but also unlocking even further gains to be had by working collaboratively with fellow island communities and further afield.”

Cllr Steven Coutts, leader of Shetland Islands Council, said: “Our ambitious deal proposals will provide significant economic growth in our islands. We can be confident that this investment in key projects will deliver lasting benefit for our island communities, Scotland and the UK. The signing of the Heads of Terms today signals the collective commitment to see our islands as the attractive place to live, work, study and invest we know them to be.”