The leader of Orkney Islands Council has called on the UK Government to urgently rethink how funding is allocated after the islands received no support from the new Local Growth Fund.
Heather Woodbridge has written to Douglas Alexander after learning that Orkney missed out entirely in the funding announcement made on 8 January 2026.
The decision means Orkney will not have another opportunity to apply for the fund for at least three years.
The Local Growth Fund replaces the UK Shared Prosperity Fund, which itself was intended to replicate EU funding streams that previously recognised the additional challenges faced by rural and island communities.
Under the new system, no part of the Highlands and Islands, including Orkney, received any funding.
Councillor Woodbridge said the methodology used by the UK Government fails to reflect the real cost of living on islands.
She pointed to some of the highest energy prices in the UK, the unavoidable cost of ferry travel within Orkney and to the mainland, higher housing costs, and the expense of transporting goods and services between islands.
She also raised concerns that the allocation model favours councils that appear to have lower need but qualify through economic partnerships with high need areas elsewhere.
As a result, Orkney, ranked 13th out of 32 local authorities, received nothing, while councils ranked lower were successful.
Since 2022, Orkney has relied on linked UK Government funding streams worth £2,375,871, but that support will end abruptly in the new financial year.
In her letter, Councillor Woodbridge urged the UK Government to reinstate revenue funding and review how future allocations are calculated.
She said the current approach risks undermining communities that the fund was originally designed to support.
“We were extremely disappointed to receive no funding in the Local Growth Fund announcement.
“This fund was created to replace EU support that recognised the unique challenges of islands and remote communities, yet none of Scotland’s counties in the Highlands and Islands have benefited.
“The methodology used to measure local residents’ income appears to completely ignore the significant costs of living in Orkney, which is deeply unfair.
“These are real, unavoidable expenses that most people elsewhere in the UK do not face.”
Councillor Woodbridge said the sudden withdrawal of support is particularly concerning.
“It is also concerning that, after relying on this funding for four years, it will stop abruptly with no transition at all.
“Orkney plays a vital role in meeting the UK’s net zero targets and leads in renewable energy, including building the UK’s largest community wind farm.
“We are also a leader in food and drink and tourism, bringing money into the UK Treasury.
“To keep delivering projects the UK depends on, we cannot be undermined by decisions that strip essential funding from our Council.”
Councillor Woodbridge said Orkney is not alone in its concerns.
“We stand with our Council colleagues across the Highlands and Islands, all of which did not receive any funding, in calling for an urgent rethink.”
