Multiple local authorities in the Highlands and Islands area have challenged the Government’s decision not to allocate them any local growth funding.

Following the announcement of a £140m boost for five Scottish regions as part of the Local Growth Fund programme, local authorities belonging to the Highlands and Islands Regional Economic Partnership (HIREP) have questioned the loss of funding that is due to affect them by the end of March 2026.

Local authorities including Argyll and Bute Council, Moray Council, Shetland Islands Council, and Comhairle nan Eilean Siar, have published statements voicing concern about the funding distribution and its impact on rural communities.

Shetland Islands Council has confirmed that its leader, Emma Macdonald, is collaborating with colleagues in Orkney and the Western Isles to write to the Secretary of State for Scotland, calling for an ‘urgent’ revision of the plan.

Ms Macdonald says: ‘It’s essential that we receive continued support from the UK Government and that at the very least there is a transitional period, rather than a sharp stop to this funding, at the end of March.

The four councils have emphasised how the UK Shared Prosperity funding had enabled them to deliver essential services such as skills support and local business development tools for members of the community.

Ms Macdonald added: ‘It appears that the UK Government’s methodology for calculating where and how much money is allocated does not recognise the high cost of living faced by islanders. We have repeatedly highlighted that our cost of living can be around 30% higher than in other areas, but once again this appears to have been left out of the equation.

‘We are extremely disappointed to see that, once again, post-Brexit economic policy will disadvantage remote and rural areas which were previously supported under EU policy.’

Cllr Paul Steele, Leader of the Comhairle said: ‘We are engaging with UK Government to request that the allocation methodology be re-examined and that transitional arrangements be put in place to mitigate against the complete removal of this funding support from 31 March.’

Cllr Jim Lynch, Leader of Argyll and Bute Council, added that the Government’s decision ‘means that our communities risk losing out on vital growth potential and improved living standards. This is worrying and unfair.’

‘We are therefore joining our fellow Highlands and islands local authorities in calling for a rethink, and a fairer, more realistic approach to allocating these much-needed funds. Our communities deserve better.’

Leader of Moray Council, Cllr Kathleen Robertson, said: ‘This new LGF is moving funding away from Highlands and Islands areas and this is extremely disappointing. We will continue to engage with both UK and Scottish Governments to secure future funding opportunities and ensure Moray’s economic resilience.’