Orkney, Shetland and the Western Isles will get a £100 million boost on Wednesday when ministers sign off on a 10-year “growth deal”.
The cash, provided in equal part by the UK and Scottish governments, will be spent on creating jobs and investing in infrastructure, transport and tourism.
The pact is the latest in a series of “city deal” schemes pledging extra cash to Scottish cities and regions.
The funding programme aims to create up to 1,300 jobs in the islands, tackle depopulation and unlock additional private sector investment – estimated to be worth around £235 million.
Scotland Office minister Iain Stewart said: “We have signed a transformational deal which will bring jobs, investment and innovation to communities across all three island areas.
“These exciting plans show the path to a fairer, more sustainable, more prosperous future as we build back better from the pandemic.
“The UK Government’s £50 million investment will boost green jobs and innovation in: sustainable energy, health, tourism, food and drink, and decarbonisation.
“Across Scotland we have committed more than £1.5 billion to Growth Deals.”
‘Reinvigorate island economies’
Scottish Government minister for transport Michael Matheson added: “The projects supported through this deal will focus on retaining and attracting young people in our island communities, encouraging new visitors, boosting innovation and skills, growing key sectors like food and drink and the creative industries, and building the infrastructure and expertise needed to capitalise on renewable energy opportunities.
“The deal will deliver projects shaped by local people and local priorities that will reinvigorate the island economies, create high-value jobs and build strategically for their long-term growth and prosperity.”
The leaders of the local authorities in Orkney, Shetland and the Western Isles all welcomed the plan, saying it would “strengthen the contribution our islands make to the national economy, and help address the challenges our island communities face, particularly as we now emerge from Covid-19.”
The Island deal follows similar agreements in the Highlands, Moray, Aberdeen and elsewhere in Scotland.
The deals have enabled economic development projects that may not otherwise have gone ahead, according to auditors.
They have also sparked increased collaboration between councils and their partners, like universities.