Island Resilience Fund 2026-27: Island Communities Impact Assessment

1. What are the aims, objectives and impacts of the Fund?

The Islands Resilience Fund (IRF) is a first 100 days of Government commitment made by the First Minister to support the resilience and sustainability of Scotland's island communities. Phase 1 of the Fund comprises a £3 million package of targeted support for island businesses and organisations disproportionately affected by sustained ferry disruption during 2026-27.

The need for intervention arises from the continued disruption experienced across Scotland's ferry network as a result of vessel shortages, breakdowns, repairs, reduced capacity and delays to replacement vessels. Whilst reliability has improved on some routes, ferry disruption continues to have significant economic and social consequences for many island communities, affecting business operations, visitor confidence, supply chains, workforce availability and access to essential services.

Phase 1 builds on the Islands Business Resilience Fund (IBRF), launched in 2025. An independent evaluation found that the Fund improved business resilience, helped businesses maintain operations and safeguarded employment. However, it also concluded that many of the challenges facing island communities are structural and longer-term in nature, including transport connectivity, workforce recruitment and retention, community capacity and supply chain resilience.

The primary objective of the Fund is to provide targeted financial support to island businesses and organisations experiencing the greatest impacts from sustained ferry disruption. The Fund aims to:

• increase business and community resilience;
• support the continuation of trading activity and service delivery;
• protect island-based employment;
• improve confidence amongst island businesses and organisations; and
• support the sustainability of island communities by maintaining key economic and community activity.

The 2026-27 Fund has also been informed by lessons learned from previous funding rounds and stakeholder engagement. Changes to eligibility criteria are intended to better reflect the realities of island economies by recognising portfolio livelihoods, clarifying eligibility for fish catching and aquaculture businesses, extending support to hauliers and improving access for smaller volunteer-led organisations.

The anticipated impacts of the Fund are expected to be positive for eligible island communities. These include helping organisations manage the immediate financial consequences of ferry disruption, protecting jobs and local economic activity, supporting community services and strengthening resilience within some of Scotland's most remote and ferry-dependent communities. The Fund is also expected to contribute to wider community sustainability by helping maintain local supply chains, supporting population retention and reinforcing confidence in the viability of island communities.