Scotland's island communities are to receive £100 million in a landmark deal that could spark a jobs boom in areas battling depopulation. 

The funds will be invested in Orkney, Shetland and the Outer Hebrides after an agreement was signed by UK and Scottish government ministers and council leaders.

Up to 1,300 jobs and £393m of investment is expected to result from the signing of the transformative Islands Growth Deal.

Over a 10-year period, it will invest in 16 projects and programmes that “capitalise on the islands’ unique assets” including renewable energy schemes and projects aimed at boosting tourism, and cultural and heritage attractions.

The funding will be split between a number of projects including a food and drink programme in the Outer Hebrides, a clean energy project in Shetland and a renewable energy-powered vertical farm in Orkney.

Jointly funded by up to £100m – £50m from each of islands – the agreement is expected to attract further investment of up to £293m in match funding. 

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The first year of the 10-year programme will see investment across the islands, including University of Highlands and Islands(UHI) campuses in Shetland and the Outer Hebrides, and the  Islands Centre for Net Zero, which will be based at the Orkney Research and Innovation Campus in Stromness. 

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Scotland has more than 790 offshore islands, 93 of which are inhabited. 

Population decline has been a serious threat to the sustainability of many of Scotland’s island communities for decades, and this continues to be the case for some.

Over the last 10 years, almost twice as many islands in Scotland have experienced population loss as have gained population.

The National Records of Scotland (NRS) is forecasting population reductions for all of Scotland’s island local authorities over the next 20 years.

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Population decline presents challenges for island communities including skills shortages, loss of culture, language and traditions, and weakened communities.

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Commenting on the deal, UK Government Minister for Scotland Malcolm Offord said: “This will not just boost local economies and create jobs, but also empower communities to get the most out of the many assets and attributes that make the islands such unique and special places to live.  

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“This deal is packed with a broad range of high-impact projects, whether it’s leading the transition to net zero or developing ‘must-visit’ destinations such as the St Kilda trail.

“The UK Government’s £50m support for the islands deal, in addition to other levelling-up investments, shows our continued commitment to the Scottish Islands.”

Scottish Government Business Minister Ivan McKee said: “This growth deal will be a game-changing initiative for our islands – enabling sustainable economic growth and delivering new and internationally significant port infrastructure that will play an important role in achieving net-zero targets. 

“This £50m Scottish Government investment will support the transition to renewable energy sources – including equipping the workforce with new skills – and trial emissions reduction initiatives on islands.

“ It will drive innovation in key space, food and drink and creative industries sectors; help develop significant tourism and cultural attractions; and expand education provision.” 

Mr McKee added: “We are determined that our islands should be attractive places to live and work and are able to maximise their contribution to Scotland’s sustainable economic transformation.”    

Councillor Paul Steele, leader of Comhairle nan Eilean Siar, said: “The signing of the Islands Growth Deal is both the culmination of a vision set out by the islands councils and the UK and Scottish Governments and the beginning of the implementation of that vision. 

“It is a milestone towards achieving our aims of securing 1,300 jobs and £393m of investment over 10 years through the Islands Growth Deal, using the resources of our islands and capitalising on our natural assets and, most importantly, our people.”