Fears for Shetland’s economy after multimillion pound Islands Deal reportedly ‘parked’ due to Covid-19

Fears have been raised that a deal, which was expected to created hundreds of jobs, reinvigorating Shetland’s economy, has been “parked” due to Covid-19.

Lerwick Community Council’s (LCC) vice-chairman Gary Robinson warned that the much sought after Islands Growth Deal, once estimated to be worth hundreds of millions of pounds, may not deliver the economic boost previously envisaged.

The IGD was intended to unlock investment in Shetland, Orkney and the Western Isles, using UK and Scottish government funding to build upon 2013’s ‘Our Islands Our Future’ campaign.

Since then, the SIC has identified projects to benefit from the deal, including the redevelopment of the Knab in Lerwick, renewable energy schemes and the emerging space industry.

The SIC’s leader Steven Coutts spoke recently about how important the funding would be in kickstarting Shetland’s economy after the Covid-19 crisis.

The Scottish government  says is still committed to the IGD is still working with partners to define the projects it will support, which will inform the level of investment available.

At Monday’s virtual meeting of the LCC, however, Mr Robinson raised doubts about its immediate prospects.

“From what I understand the Islands Deal has been parked due to Covid-19,” he said.

“I think there might be a limited amount of work going on … but I think all indications are that it’s not looking as lucrative as maybe we once hoped.”

Despite downplaying the prospects of the deal, Mr Robinson said it remained important to “push to get as much as we can out of it”.

Speaking after the meeting, a Scottish government spokesman said it was important the deal took account of the “unprecedented economic challenges” created by Covid-19.

“We are working with partners, to understand how best to move forward and respond to current circumstances,” he added.

“Work is already underway with all our growth deal partners to identify where deals can best support economic recovery, taking account of what is both affordable and achievable for all parties without compromising on quality of the projects delivered.”

LCC members also highlighted the need for other organisations to play their part in the renewal of Shetland’s post-Covid economy.

While the current financial situation was reported to be holding up, with money available through various sources, chairman Jim Anderson said he feared the fallout from Covid-19 was yet to come.

“I can only think things are going to get worse rather than better,” he added.

The SIC’s Stephen Leask agreed.

“The money’s really going to be needed during the recovery phase of this pandemic,” he added.

The LCC has been asking Shetland Charitable Trust how it proposed to help the community and calling upon it to “work quickly” to “minimise the distress”.

The trust’s latest response, sent on behalf of its chief executive Ann Black, said it had reopened its main grant scheme following discussions to understand the changes applicants face due to Covid-19.

She said the trust had already agreed £7.3m of funding for this financial year.

“These grants have been awarded despite the level of uncertainty and the ability of organisations to deliver the charitable activities during lockdown, which puts Shetland in a very privileged position,” Ms Black added.

“The trust looks forward to distributing a further £8.4 million locally in the next financial year which should ensure, in conjunction with the plethora of Covid-19 government and national support that is available, that organisations are able to continue to deliver services for the benefit of the people of Shetland.”

LCC member Stewart Hay pointed out that “our neighbours over the North Sea have already been extremely active with their funds”, referring to the £5m business support announced by Orkney Islands Council in response to Covid-19.

Mr Hay said the renewal of Shetland’s economy would require funding and support from “many organisations” and it would be worthwhile enquiring how “proactive” a role the trust would play.

“They are integral to the lifeblood of Shetland and the plan for its future,” he added.

Mr Robinson also suggested the Highlands and Islands Enterprise (HIE) would have a role to play supporting businesses.

He said they needed to work on how to transform Shetland’s reliance on oil and gas to a more diversified economy.

Rachel Hunter, HIE’s director of service delivery, said the organisation had reshaped its priorities to meet the changing needs of businesses and communities over recent months

She highlighted recent work on the distribution of the Scottish government’s support funds, including such as the Creative, Tourism and Hospitality Enterprises Hardship Fund, the Pivotal Enterprise Resilience Fund and the Supporting Communities Fund.

Ms Hunter said HIE was also working with partners and Shetland businesses to inform its approach to the post-Covid “reset and recovery stages”, including weekly meetings through the Shetland Business Resilience Forum.

She said it would be important make the most of new opportunities, such as helping the country reach its net zero carbon emissions target.

“The long-standing principles of research, collaboration, innovation and entrepreneurship will be central to competitiveness and a successful recovery,” she added.

“Shetland has a great track record in these principles and our role is to support business growth and ongoing diversification to ensure the islands’ economy adapts to new circumstances and benefits as much as possible from new opportunities.

“Part of this will include emphasis on Shetland’s great quality of life as a key factor in attracting new talent to the islands.”