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Scottish Government Funding - Islands Programme, Carbon Neutral Islands Capital Fund and Regeneration Capital Grant Fund

Argyll and Bute Council · 19 June 2025
Back to Environment, Development and Infrastructure Committee — 19 June 2025 and its agenda

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ARGYLL AND BUTE COUNCIL   ENVIRONMENT, DEVELOPMENT AND
INFRASTRUCTURE COMMITTEE
DEVELOPMENT AND ECONOMIC GROWTH        19 JUNE 2025 
SCOTTISH GOVERNMENT FUNDING - ISLANDS PROGRAMME, CARBON NEUTRAL
ISLANDS CAPITAL FUND AND REGENERATION CAPITAL GRANT FUND 
1.0 EXECUTIVE SUMMARY 
1.1 The Scottish Government has announced that Islands Programme funding of £5.3m
would be available for the 2025/26 financial year to fund capital projects on inhabited
Scottish islands. A further £1.4m is available to support the Carbon Neutral Islands
(CNI) in their progression towards net zero. In addition, a call for stage one Expressions
of Interest for Regeneration Capital Grant Fund (RCGF) applications for projects
delivering in the 2026/27 financial year has also recently been issued. This paper
outlines the funds, the respective requirements for applications to each fund and
progress made towards identifying projects for submission. All three funds have made
a significant contribution to the delivery of capital projects across Argyll and Bute over
previous years.
1.2 Members are asked to note that these are all highly competitive funds and based on
previous years it is considered likely that budgets will be oversubscribed.  Once
applications are submitted, the Transformation Projects and Regeneration Team will
continue to have a role in ensuring that we fulfil the grant conditions including
monitoring and reporting requirements. Project Officers within lead organisations will be
responsible for managing the delivery of successful projects and ensuring all funding is
drawn down in line with the criteria for the programme. 
RECOMMENDATIONS 
It is recommended that the Environment, Development and Infrastructure
Committee:- 
i). Note the process for applying to the Islands Programme and Carbon Neutral
Islands Capital Fund and the 22 July 2025 deadline for applications.

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ii). Approve the recommended Island Programme projects detailed in paragraph
4.10 that will form the basis of funding bids to the Scottish Government. 
iii). Approve the submission of any of the potential CNI Capital Fund Projects listed
at paragraph 4.15, subject to the project lead determining that this is still a
project that should be progressed. 
iv). Note the process for applying to the Regeneration Capital Grant Fund and the
27 June 2025 stage one deadline. 
v). Approve the submission of any of the recommended RCGF projects listed at
paragraph 4.22 that will form the Expressions of Interest from Argyll and Bute
Council to the Regeneration Capital Grant Fund for 2026/27. 
vi). Agree to delegate authority to the Executive Director with responsibility for
Development and Economic Growth to approve the funding applications prior to
submission to the Scottish Government. 
vii). Note that the Transformational Projects and Regeneration Team will be
responsible for managing expenditure and ensuring compliance with grant
funding conditions for successful projects.

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ARGYLL AND BUTE COUNCIL   ENVIRONMENT, DEVELOPMENT AND
INFRASTRUCTURE COMMITTEE
DEVELOPMENT AND ECONOMIC GROWTH        19 JUNE 2025 
SCOTTISH GOVERNMENT FUNDING - ISLANDS PROGRAMME, CARBON NEUTRAL
ISLANDS CAPITAL FUND AND REGENERATION CAPITAL GRANT FUND 
2.0 INTRODUCTION 
2.1 On 13 May 2025, the Scottish Government announced that Islands Programme funding
of £5.3m would be available for the 2025/26 financial year to fund capital projects on
inhabited Scottish islands. The fund is open to all local authorities in Scotland with
inhabited islands and will be distributed on a competitive basis. The fund will be
administered by Scottish Futures Trust (SFT) on behalf of the Scottish Government. 
2.2 The Scottish Government have also announced a £1.4m fund to support the Carbon
Neutral Islands (CNI) in their progression towards net zero. This fund is only open to
islands within the Carbon Neutral Islands Programme.  Islay is one of six Scottish
Islands that is eligible for this funding.  CNI funding will also be distributed on a
competitive basis for capital projects that support the transition to net zero.  This paper
provides background to the funds and sets out the proposed projects that will form the
basis of funding applications to the Scottish Government.
2.3 On 15 May 2025, the Scottish Government also issued a call for Expressions of Interest
for Regeneration Capital Grant Fund (RCGF) applications for projects delivering in the
2026/27 financial year. The fund is available for large scale transformational change
projects with strong regeneration outcomes and is open to all local authorities across
Scotland and the Clyde Gateway URC. This paper provides background to the fund, the
process that has been gone through to identify potential projects and sets out the projects
that are proposed to form the expressions of interest to be submitted by the Council.

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3.0 RECOMMENDATIONS 
3.1 It is recommended that the Environment, Development and Infrastructure
Committee:-
i). Note the process for applying to the Islands Programme and Carbon Neutral
Islands Capital Fund and the 22 July 2025 deadline for applications. 
ii). Approve the recommended Island Programme projects detailed in paragraph
4.10 that will form the basis of funding bids to the Scottish Government. 
iii). Approve the submission of any of the potential CNI Capital Fund Projects listed
at paragraph 4.15, subject to the project lead determining that this is still a
project that should be progressed. 
iv). Note the process for applying to the Regeneration Capital Grant Fund and the
27 June 2025 stage one deadline. 
v). Approve the submission of any of the recommended RCGF projects listed at
paragraph 4.22 that will form the Expressions of Interest from Argyll and Bute
Council to the Regeneration Capital Grant Fund for 2026/27. 
vi). Agree to delegate authority to the Executive Director with responsibility for
Development and Economic Growth to approve the funding applications prior to
submission to the Scottish Government. 
vii). Note that the Transformational Projects and Regeneration Team will be
responsible for managing expenditure and ensuring compliance with grant
funding conditions for successful projects.   
4.0 DETAIL 
Islands Programme
4.1 The key objectives of the Islands Programme for 2025/26 are:
• To sustain, enhance and develop transformational and critical infrastructure
projects based on local priorities whilst supporting the National Islands Plan. 
• To reshape infrastructure by supporting shovel worthy projects, co-ordinating with
other funded and planned initiatives on the islands to drive sustainable island
growth. 
• To support projects which use clear Place based, Community Wealth principles to
support inclusive island growth and reduce poverty while working to achieve the
Scottish Government’s Net Zero Ambitions and a Just Transition. 
• To maximise leverage of partnership, investment, and cross policy funding.

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4.2 The Council has been successful in securing £1.5m of Islands Programme funding over
the last three financial years. This has helped to deliver flood protection, digital
infrastructure, care facilities and housing enabling infrastructure on the islands of Mull,
Iona, Islay, Tiree and Coll. Funding of £5.3m is available in the 2025/26 financial year
and this will be subject to a competitive bidding process.
4.3 In notifying the Council of the opening of the Islands Programme for 2025/26, the
Scottish Government advised of the following timescale for submission and
determination of applications:
• Applications deadline – 22 July 2025
• Investment Panel recommendations – August 2025
• Projects for 2025/26 funding announced – early Autumn 2025
• Grant drawdown / project delivery - to 31 March 2026. 
It should be noted that the timescale for submission and drawdown of this fund is
extremely challenging which requires the Council to prioritise projects that are
sufficiently developed to be delivered this financial year.  Members are asked to note
that there is no facility for funding to be carried forward into the 2026/27 financial year.
4.4 Officers from the Transformation Projects and Regeneration Team have referred to the
internal project pipeline and colleagues from other teams and services including the
Health and Social Care Partnership to identify viable projects. Due to the short
timescale for submission of applications, the fact the application period falls over the
summer holiday period and subsidy control regulations, priority has been given to
Council and other public sector projects. 
4.5 All projects were considered against the following Scottish Government scoring
methodology for the fund:-
• Deliverability (30%)
o Demonstrating Deliverability
o Viability
• Need and Partnership (35%)
• Project Outcomes (35%)
4.6 SFT have emphasised there is a particular importance on deliverability as there is no
ability for funding to be carried forward into the next financial year. Projects must be
able to demonstrate that a financial commitment (i.e. have spent the money or have a
signed contract) will be in place before 31 March 2026, ideally earlier. This is a
challenging timescale given the need to follow public procurement regulations, confirm
match funding and obtain statutory consents before contracts can be signed.
4.7 The Council have undertaken pre-application discussions with SFT in order to shortlist
projects that are considered to have strong alignment with the funding criteria.  SFT
have advised that the 2025/26 funding will prioritise projects that deliver critical
infrastructure and can demonstrate community support. 
4.8 Following identification of potential Council led projects, it became clear that there were
only a limited number which were suitable and ready to be delivered. On this basis, we

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took the decision to review potential community projects submitted through the Aspiring
Places Portal.  Two community projects (Unlocking Ulva and Skerryvore Lighthouse
Cottages) have been identified as having a good fit with the objectives of the Islands
Programme and as such are being recommended for funding bids to the Scottish
Government.
4.9 Further details of priority projects for Islands Programme funding is included in the
Table in paragraph 4.10.  Given the timescales for submission of applications, work is
already underway in preparing these applications for submission before the deadline of
22 July 2025.
4.10 Members are asked to note that funding is sought for the initial pre-construction phases
of the Royal Hotel project.  Funding from the Islands Programme is sought as part of a
package of financial support for this project which includes match funding from the UK
Government’s Community Regeneration Partnership, private sector funding and HIE.
Project Name - description Project Lead IP funding
request
Total project
value
Former Royal Hotel, Rothesay –
Detailed design works
Transformation
Projects and
Regeneration
£400,000 £6,200,000
Community Digital Hubs Phase
2
Strategic
Transportation
£100,000 £100,000
Unlocking Ulva – Community
Barge Project 
North West
Mull
Community
Woodland
Company
£200,000 £200,000
Skerryvore Lighthouse Shore
Station - The Lighthouse
Cottages
Hynish Trust £225,000 £300,000   
Carbon Neutral Islands Capital Fund
4.11 In addition to the Islands Programme, the Scottish Government has also confirmed
£1.4m of funding to support the Carbon Neutral Islands (CNI) programme.  The CNI
project is a Scottish Government commitment aimed at supporting six islands to
become carbon neutral by 2040. Islay is the only island within Argyll and Bute that is
part of the CNI programme.
4.12 Islay Energy Trust have worked with the CNI Steering Group to prepare a Climate
Change Action Plan. In 2024/25, they received £246,444 to deliver solar and battery
storage to solutions to seven community buildings on the island whilst Islay
Development Initiative received £142,285 to support their forestry project. 
4.13 In order to ensure compliance with the national subsidy control regimes and to make
funding applications submitted through the Council open, fair and transparent we are
moving toward utilising Aspiring Places to gather community projects. For the first time,

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the Council has put out a call for expressions of interest to be submitted through the
Aspiring Places platform and eight projects were submitted within the deadline.
4.14 Proposals have been reviewed by the CNI Steering Group on Islay and their proposed
projects have been taken into consideration in identifying the projects listed below.. The
timescale for application, decision and expenditure mirror those of the Islands
Programme with a focus that outputs and outcomes should also contribute to the local
Climate Change Action Plan. For the CNI Capital Fund there is a minimum project
value of £75,000.
4.15 Work is ongoing by the CNI Steering Group to assess the viability of the proposed
projects and we will seek feedback from SFT, if possible. This may lead to some of the
following projects not progressing to application stage however at the time of writing; it
is recommended that the following projects be submitted as bids. Should this change
prior to committee a verbal update will be provided. Due to the timescales for
submission of applications, work will commence in preparing these applications for
submission before the deadline.
Project Name - description Project Lead CNI funding
request
Castlehill Solar Array Expansion IET £200,000
Additional Measures - Community Buildings
Phase 2
IET £310,000
Ionad Chaluim Chille Ìle Wind Turbine
Initiative
IET £200,000
Islay EV Capacity Initiative IET 300,000 
Regeneration Capital Grant Fund
4.16 The Regeneration Capital Grant Fund (RCGF) is seeking expressions of interest for
projects to be delivered in the 2026/27 financial year. RCGF supports place-based
approaches to delivering regeneration and inclusive growth projects. The funding
should help to address persistent vacant and derelict land as well as supporting locally
developed, transformational place-based regeneration projects that involve local
communities, help tackle inequalities and improve the economic, social, and physical
environment of deprived, disadvantaged and fragile remote communities across
Scotland. There is a focus on larger scale transformational projects that have strong
regeneration outcomes including supporting and creating jobs, business space and
bringing derelict land back into use.
4.17 Argyll and Bute Council has previously been successful in securing substantial funding
through RCGF including the 2025/26 allocations for Fyne Futures Local Food
Production and Training Centre and the Isle of Luing Community Slate Quarry projects.
4.18 The RCGF will follow a two stage application process with the following timescales:
• Stage 1 Expressions of Interest - 27 June 2025 
• Investment panel recommendations and applicants notified - August 2025
• Stage 2 application deadline - November 2025

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• Investment panel recommendations agreed - December 2025  
• Projects for 2026-27 funding announced - early 2026 
• Grant drawdown/project delivery - by end March 2027
4.19 As with the CNI funding, the Council have put out a call for community projects to be
logged on the Aspiring Places platform. In order to allow a period of time for these
significant projects to come forward the deadline for the submission of expressions of
interest on Aspiring Places was set as 2 June 2025 and 33 projects were submitted for
consideration. 
4.20 Following this deadline, two officers reviewed the projects to identify those that fit most
closely with the aims and objectives of the fund, which is to support largescale
transformational projects that have strong regeneration outcomes as well as
addressing market failure. A number of the projects put forward through Aspiring
Places were assessed as not meeting the majority of these aims however officers
recognise the benefits that these projects could bring. Where possible officers have
signposted organisations to other funding sources, which may help them to progress
their proposals.
4.21 We have also reviewed the emerging Pipeline of Projects to determine whether there
are any Council led projects that might be eligible for RCGF funding. There was just
one project with a funding gap that was eligible for this funding and could deliver within
the timescale required. 
4.22 Officers will now contact the potential projects to confirm the details on Aspiring Places
and undertake other checks. Whilst further work is required to confirm the details of the
projects, at the time of writing, it is recommended that the following projects be
submitted as Expression of Interest bids for RCGF in 2026/27. Should this change prior
to committee a verbal update will be provided. Due to the timescales for submission of
applications, work will commence in preparing these applications prior to committee
due to the imminent deadline for submission.
Project Name - description Project Lead RCGF
request
Total
project
value
Council Led Projects 
Kintyre Sea Sport Rural Growth
Deal Project
RGD Team £800,000 £3,100,000
Aspiring Places Projects
Sonas Childcare South Islay
Development
£900,000 £1,085,100
Tarbert Harbour Watercraft
Launch & Recovery Slipway and
Community Activity Hub
Tarbert (Loch
Fyne)
Harbour
Authority
£850,000 £1,400,000
Lighting Up the Shore Station - a
sustainable hub for Tiree
Hynish Trust £850,000  £850,000 
Nonhebel Park (Final Phase) Mull and Iona
Community
Trust
£400,000  £600,000

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Tighnabruaich Community
Refueling and Community Hub
Tighnabruaich
District
Development
Trust
£120,000  £200,000 
4.23 Members are asked to note that these are all competitive funds and based on previous
years it is considered likely that budgets will be oversubscribed.  As such, it is important
that projects are sufficiently developed to enable the best chance of success and to
ensure that if successful the funding can be fully drawn down for the benefit local
communities.
4.24 Once applications are submitted, the Transformation Projects and Regeneration Team
will continue to liaise with SFT and the Scottish Government. Where projects are being
delivered by other teams within the Council or third parties, the Team will work with the
identified project lead for successful projects to ensure that we fulfil the grant conditions
including monitoring and reporting requirements. Project Officers within lead
organisations will be responsible for managing the delivery of successful projects and
ensuring all funding is drawn down in line with the criteria for the programme. 
5.0 CONCLUSION
5.1 The Islands Programme, Carbon Neutral Islands Capital Fund and Regeneration
Capital Grant Fund offer can support island and community based infrastructure
projects, which can help to sustain and enhance our area. Priority projects have been
identified based on strategic fit with funding criteria and deliverability within challenging
timescales.
5.2 The Transformational Projects and Regeneration Team have a strong track record of
securing and overseeing the delivery of grant funded projects working in partnership
with other Council teams and external stakeholders. 
6.0 IMPLICATIONS  
6.1 Policy - all applications are required to support relevant Scottish Government policy
such as the National Islands Plan. The strongest applications will also support local
policy.
6.2 Financial - if successful, the projects will secure funding from the Scottish
Government however, some projects may also require match funding, where this is
the case and it impacts on the Council this will be sought through other
Council/HSCP approval processes.
6.3  Legal – the support of legal services will be required in relation to the grant contract,
creation of standard securities and other legal requirements associated with the
funding.

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6.4  HR – as an applicant for the grant there is an expectation that the Council meets the
Fair Work First requirements of the Scottish Government. As the council currently do
not meet all requirements, an application for exemption has previously been granted.
Staff time will be required to prepare the applications, monitor and report on the
applications and deliver the projects.
6.5 Customer Service – no implications anticipated.
6.6 Risk – each project will have its own risks, which will be managed by the team
identified as the project lead. At this stage, there is a risk that the funding
applications will not be successful and significant staff resource is required in
developing and submitting applications. Given the time timescale for expenditure,
there is a risk that delays in project delivery could reduce the funding received.
6.7   Climate Change - The projects will have varying impacts on climate change but all
projects will look to minimise any negative impacts where possible. All projects put
forward for CNI Capital Finding are focused on supporting the delivery of the Islay
Climate Change Action Plan and making a positive contribution toward the move to
net zero. 
6.8  Fairer Scotland Duty - as an applicant for the grant there is an expectation that the
Council meets the Fair Work First requirements of the Scottish Government. As the
council currently do not meet all requirements an exemption has been granted by the
Scottish Government.
6.9 Equalities - protected characteristics – no implications anticipated. 
6.10 Consumer Duty – no implications anticipated. 
6.11 Island Communities – for two of the funds projects are required to be based on an
inhabited island to be able to bid for funding, the limited amount of funding available
and the nature of the fund means that it isn’t possible for all island communities to
benefit from this round of funding. All projects will seek to improve their local
communities.
6.12 Children’s Rights and Wellbeing – no implications anticipated. 
Kirsty Flanagan, Executive Director with responsibility for Development and
Economic Growth
Councillor Jim Lynch Policy Lead for Economic Development, Housing,
Communities and Islands 
4 June 2025                                       
For further information contact: 
Fergus Murray, Head of Development and Economic Growth 
Fergus.murray@argyll-bute.gov.uk

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Jonathan Welch, Transformational Projects and Regeneration Manager
Jonathan.welch@argyll-bute.gov.uk 
Anna Watkiss, Senior Development Officer
Anna.Watkiss@argyll-bute.gov.uk