Empowering Scotland's Island Communities: progress update March 2016

Harnessing Islands Resources

Crown Estate

A key prospectus commitment by the Scottish Government was to give island and coastal councils the net income from Crown Estate marine assets out to 12 nautical miles, following devolution. We continue to believe that the marine assets of island communities are key to their future and the wealth that is generated should be reinvested as provided for above to safeguard that future. Aquaculture and Crown Estate rental incomes are particular opportunities for island communities to secure community benefit that can help to empower them to fulfil their potential.

Alongside re-affirming this commitment, the Scottish Government has also discussed with the Island Councils the potential for increasing local accountability for Crown Estate assets ahead of a Scottish Bill on the future management framework for Crown Estate assets in Scotland after devolution, We have been engaging with the Island Councils to explore the possibility of a future statutory or non-statutory pilot of management of the Crown Estate (in the context of the Scotland Bill and the Smith Commission recommendations), and this dialogue will continue.

Our vision continues to be that future development of the islands and the seas around them are planned and managed for all our benefits through an agreed arrangement of national, regional and local partnerships, with the Scottish Government and local authorities as central partners having a share in these responsibilities.

Energy

Scotland's islands have long played an important role in energy production that has brought social and economic benefits to the islands and the rest of Scotland. With their considerable potential for renewable development they will continue to be an important source of energy in the future.

The Island Councils have strong track records stretching over 40 years in local management and commercial extraction of marine resources, through formal arrangements such as works licensing under the Zetland and Orkney County Council Acts and agreements with the oil industry.

We are working hard to support the oil and gas sector, recognising the challenges currently facing the oil and gas industry noting that Orkney and Shetland, with their large harbour areas more adjacent to the oil production and exploration area, can do much to reduce the excessive cost base of the oil sector. The Scottish Government has acted decisively, using the levers under our control, to support the industry; including establishing the Energy Jobs Taskforce as well as actively influencing the UK Government to implement the appropriate fiscal and wider policy framework. We are continuing to press the UK Government on these issues. We have also set up a £12 million Transition Training Fund to augment the work of the Energy Jobs Taskforce to help people who have lost, or are at risk of losing, their jobs in the oil and gas sector to either retrain or to undertake further education.

Our prospectus for Empowering Scotland's Island Communities made clear that we are committed to supporting capital projects on the islands to support both the oil and gas industry and renewables. With a view to the economic opportunities around decommissioning Highlands and Islands Enterprise ( HIE) approved £1.195 million to Lerwick Port Authority ( LPA) (including £324,416 from ERDF) towards an £11.95 million investment to strengthen and develop quayside infrastructure at Dales Voe South in Lerwick in 2014/15. In addition HIE approved £628,000 to Peterson ( UK) Ltd towards its 'Deep Water Shetland' project to further expand its decommissioning capability at Lerwick Port. The projects are complementary and will help secure Shetland's place as a decommissioning centre of excellence in future, placing Shetland at the forefront of an emerging sector.

Over the past decade we have supported community renewables generation schemes on the islands through schemes such as the Scottish Government's Community and Renewable Energy Scheme ( CARES) and the Renewable Energy Investment Fund ( REIF), for example the 9MW Point and Sandwick community wind farm in Lewis, and the District Heating Loan Fund, for example the £1.6 million loan committed for 2MW of sea water source heat pump for the Shetland Heat Energy and Power ( SHEAP) district heating scheme. A number of communities in Orkney have successfully obtained CARES innovation support and are currently developing projects to consider options for local energy use. For example, a project in Orkney has been offered £1.46 million under the CARES Local Energy Challenge Fund Round 1 to develop a major capital project incorporating electricity generation, hydrogen production and local transport needs. Four island projects have been supported at the feasibility stage of the 2nd round of the Local Energy Challenge Fund; two from Orkney and two from the Western Isles.

The Scottish Government has strongly promoted the advantages of community benefit and shared ownership encouraging developers to deliver community benefits at £5,000 per installed MW per year and to explore opportunities for increased levels of ownership with local communities.

We are also working with the UK Government through the Scottish Islands Renewables Delivery Forum, chaired jointly by Scottish and UK Government Ministers to establish a distinct category of support for remote islands onshore wind, one that recognises the very high costs of establishing grid infrastructure necessary to connect Shetland, Orkney and the Western Isles to the mainland transmission grid. Through the work of this group Department of Energy and Climate Change ( DECC) has developed a Contract for Difference (CfD) for remote islands to sit alongside other 'less established technologies' and will formally seek the European Commission's state aid approval for the scheme when CfD budgets and strike prices are announced in Q1/Q2 2016. Ofgem has also worked with the transmission owner ( SHET) and developers to streamline processes for approving needs case for the island connections. The Scottish Government has also commissioned an independent study into the challenges and implications of poor grid connections for the islands.

The Scottish Government is currently developing a new, overarching energy strategy for Scotland that will build on our desire for communities to see the benefits of more localised energy production and will take account of the characteristics of remote energy systems such as those on Scotland's islands. This includes: assessing opportunities for the aggregation of supply and demand at a local level; finding more ways to bring the supply of low carbon energy closer to people and maximise local benefits; and exploring how new models of provision that permit a greater community stake in the energy system can be supported. With regards to lower carbon energy, the migration of many transport and energy production assets to Liquefied Natural Gas ( LNG), most notably ferries, the islands have a part to play in any future LNG infrastructure strategies and polices which would be developed with the long-term goal of a decarbonised energy system by 2050.

Marine Planning

The Scottish Government committed to delegating statutory regional marine planning for the Island areas (to 12 nm) to local Marine Planning Partnerships in which the local authority would play a lead role. Boundaries for Marine Regions are now confirmed in statute (Scottish Marine Regions Order 2015). Shetland is one of the first Scottish Marine Regions to establish a Marine Planning Partnership. Orkney is working with The Highland Council and Marine Scotland to pilot a voluntary regional marine plan - the lessons learned could help to inform the development of a Marine Planning Partnership in Orkney and regional marine plans across Scotland.

Alongside this Scottish Ministers adopted our first National Marine Plan in March 2015. This sets a framework for sustainable development for all Scottish waters out to 200 nautical miles and is binding on all UK public authorities. The Plan establishes a consistent base for the future development of regional marine plans and ensures an ecosystem based approach to development.

Fisheries

The fishing industry is one of the key employers in our island communities. The Scottish Government recognises the need to support the industry and supports the principle within the Common Fisheries Policy of the EU which states 'Small offshore islands which are dependent on fishing should, where appropriate, be especially recognised and supported in order to enable them to survive and prosper.' The Scottish Government will continue to press and represent our island communities case where specific issues arise during international negotiations. Alongside this, the Scottish Government has taken additional steps to ensure our islands are given greater collective representation on the Fisheries Management and Conservation Group and the Inshore Fisheries Management and Conservation Group. A reformed network of Inshore Fisheries Groups will also help improve local engagement and participation, involve local stakeholders (including fishermen) in decision making, and provide a framework for fisheries advice to feed into wider marine planning.

Aquaculture

The Scottish Government recognises the importance of the Aquaculture industry to our island communities. That's why the Government committed to a request from the Island Councils for collective representation on the Ministerial Group for Sustainable Aquaculture. Alongside this the Government and Island Councils have been working with the aquaculture industries and those involved in the regulatory framework to develop a 'planning brief' for aquaculture to underpin further development and growth of the sector, including the creation of a 'community benefit charter'. Shetland Islands Council has drafted a local authority Development Concordat. Completion of this has been delayed until the arrangements regarding the Crown Estate are finalised. The industry have prepared a community engagement charter which is currently in draft form and is expected to be launched and published in spring 2016.

Crofting & Agriculture

The Crofting Stakeholder Forum ( CSF) was established in 2014 by the Scottish Government at the request of stakeholders. Its purpose is to consider crofting stakeholder interests and how crofting interfaces with Scottish Government crofting policy. The Forum has representatives from a range of organisations including the Scottish Crofting Federation; NFU Scotland; COSLA; the Crofting Commission; Highlands and Islands Enterprise; Scottish Land and Estates; and young crofters.

The CSF members have recently written to the Minister for Environment, Climate Change and Land Reform and set out five priority areas for crofting, along with recommendations for action. The priority areas are: simplify crofting legislation; promotion of new entrants to crofting; increase provision of affordable housing in the crofting areas; establishing different crofting development arrangements; and financial incentives. The Scottish Government will set out its response shortly.

The Croft House Grant Scheme ( CHGS) provides crofters with financial assistance towards the cost of building or improving croft houses. This helps to attract and retain people in the crofting areas. Currently around £1.4 million of support is provided through CHGS each year and this supports the construction or improvement of around 60-70 croft houses. Since 2007 the Scottish Government has approved over £14 million of CHGS payments to almost 700 crofters.

The current Scheme has been operating since 2006. Following requests from stakeholders the Scottish Government carried out a consultation between 6 January and 31 March 2015, on potential changes to the Scheme. A further short engagement exercise took place between 8 November and 4 December 2015. On 1 February 2016, the Minister for Environment, Climate Change and Land Reform laid the regulations for the new Croft House Grant Arrangements ( CHGA). The new Arrangements will come into force in April 2016.

The current Scheme is available at the three rates of £11,500, £17,000 and £22,000k. The new Arrangements will be available at the two rates of £28,000 (standard) and £38,000 (higher). All island areas will now be eligible for the higher rate.

A selection mechanism will be used under CHGA to ensure that support is targeted at those most in need. Another benefit of the new arrangements is that eligibility has been extended to give parity to owner-occupier crofters, tenant crofters and to include the crofting areas that were designated in 2010.

Rural

The Scottish Government's commitment to the establishment of Scotland's first Rural Parliament in 2014 provides a platform to help empower rural communities, including those in our islands, giving them a stronger voice to initiate change at a local and national level. Over 400 people attended the first national meeting of the Rural Parliament in November 2014 with representation from every rural local authority in Scotland. An Action Plan was published in July 2015 which Scottish Rural Action ( SRA) are taking forward with others on behalf of rural communities. The Action Plan highlights that many of the opportunities and challenges faced by island communities are also faced by communities in other parts of rural Scotland e.g. transport, broadband and access to services issues. The Scottish Government has provided £200,000 to support Scottish Rural Action to help enable the delivery of the objectives set out in the Rural Parliament's Action Plan along with other key partners. The next national Rural Parliament event will take place between 6-8 October 2016 in Brechin http://www.scottishruralparliament.org.uk/.

The Scottish Government has also ensured that Island Councils are represented on the Rural Development Operational Committee and Joint Programme Monitoring Committee for the Scottish Rural Development Programme.