Islands Programme capital fund 2021/22 to 2024/25: grant awards - evaluation

7. Discussion and conclusions

7.1 This process evaluation sought to examine the mechanism currently used for disbursing Islands Programme funding and to consider whether a revised approach was merited.

7.2 The evaluation focused on four broad questions:

• Under the current competitive bidding process, to what extent have communities been meaningfully involved in decisions about how Islands Programme funding was used at a local level?
• What are the advantages / disadvantages of different mechanisms to disburse capital funding (i.e. competitive bidding, direct allocation, opening the fund to community groups, and others)?
• How effective is the process of assessing applications and awarding grants under the current process?
• How effective are the fund’s management and monitoring arrangements?

7.3 Each of these questions is addressed below.

7.4 The final sections of this chapter set out (i) the features of an optimal mechanism, and (ii) the conclusions arising from the evaluation.

To what extent have communities been meaningfully involved?

7.5 Representatives of 17 community organisations participated in the evaluation. All of these had projects that were submitted to the Islands Programme. Thus, any assessment about the extent to which communities in general have been meaningfully involved does not include those communities who were unaware of the Islands Programme or who had aspirations to participate but did not have the capacity or capability to do so.

7.6 Among those community representatives who did take part in the evaluation, most reported successful – and meaningful – collaboration with their local authorities in relation to the development of their applications. Some explicitly said this collaboration had provided an impetus for ongoing communication and positive working relationships between them and their local authorities. Others said that, as a consequence of this collaboration, their local authority had a greater awareness of, and buy-in, to their project and the wider work of their organisation.

7.7 The evaluation found that in some cases the community representatives took the lead in developing the application. These individuals reported spending days or weeks on this task, including time spent seeking advice and guidance from their local authority. Although this process was highly resource intensive for the community representatives, some said they believed it was appropriate that they should tell the story of their own project. They also appreciated the work that their local authority officers did to improve their application and to deal (post-award) with monitoring and reporting requirements.

7.8 Another finding of the evaluation was that local authorities had different approaches for learning about the priorities of their local communities – for example, running a fairly rapid ‘expression of interest’ process to seek out potential projects for Islands Programme funding; inviting suggestions from other organisations that had a remit to work with community organisations on infrastructure projects; using their own ‘tracking information’, prioritisation matrix, or local networks to identify ‘shovel ready’ projects. From the perspectives of the community representatives, these differing approaches appeared to work reasonably well, with just the occasional dissenting voice in some areas.

7.9 A small number of community representatives said they were unaware of the Islands Programme before they had been involved in the application submitted on their behalf and they suggested that an exercise to increase awareness of the fund among community groups would be helpful.

7.10 Irrespective of any changes that the Scottish Government may make in relation to a future funding mechanism for the Islands Programme, it may wish to consider how current application material and application forms could be made more user-friendly for the community partners who are often involved in completing these application forms.

What are the advantages and disadvantages of different funding mechanisms?

7.11 Chapters 4 and 6 have provided a summary of what stakeholders saw as the advantages and disadvantages of different funding mechanisms for capital grant schemes. This information is not repeated in full here. However, it is worth noting that the key aspects of the current (competitive bidding) process that were reported to be working well were:

• The flexibility of the Islands Programme in relation to the types of projects it funds (i.e. large-scale and small-scale projects; projects led by local authorities and projects led by communities) – although, note that this is not especially a feature of the funding mechanism, but rather, simply, a positive feature of the Islands Programme
• Its role in facilitating partnership working between local authorities and community organisations – at least in some geographic areas
• The evidence-based focus of the assessment process and the alignment of funded projects to the strategic priorities of the National Islands Plan
• The involvement of SFT in supporting delivery of the programme.

7.12 Aspects of the current process that were reported to be working less well were:

• The timing and timescales associated with the annual funding rounds, which presented major challenges for local authorities and community organisations
• The resource intensiveness of the process – both for local authorities and community organisations – coupled with the uncertainty of knowing whether an application will be funded
• The lack of certainty about the levels of funding available in the longer-term, and the implications of this for strategic decision making and efficient planning.

How effective is the process for assessing applications and awarding grants?

7.13 The findings of the evaluation confirm that the process for assessing applications and awarding grants is thorough, robust and fair. However, there was also a view that the information requested – and provided – through the application process was not always adequate to enable the panel to make a fully informed judgement about the viability of projects in the longer term.

7.14 The composition of the panel is appropriate – with most members now having direct knowledge or previous experience of working in island communities. The participation of young people from the Young Islanders Network has been welcomed.

7.15 Panel members take their responsibilities in assessing applications seriously, and the review process overall is thorough and wide ranging. Due care and attention are given to ensuring that all panel members are properly supported and that any (potential) conflicts of interest in decision making are avoided or appropriately managed.

7.16 Panel members made a number of suggestions for how the assessment process could be improved and these have been reported in Chapter 5.

7.17 It is important to note that the number of applications to the Islands Programme has increased each year. In addition, the quality of applications has increased, with all applications in the most recent round (2024/25) reaching the quality threshold for funding. Should this trend continue, with the size of the funding pot remaining fairly stable, there will be an increased risk of local authority applicants (and representatives of community organisations that participate in this process) spending considerable time in developing good-quality applications that are unable to be funded. If the Scottish Government intends to retain the competitive bidding process, it may be necessary to consider ways of reducing this risk. This could be done, for example, by (i) introducing a maximum amount that can be applied for, (ii) developing a mechanism for ensuring the funding in each year is spread across all island authorities (i.e. ensuring that ‘everyone gets something’), and / or (iii) directing project funding to certain types of projects (for example, projects relating to community-owned assets).

How effective are programme management and monitoring arrangements?

7.18 The evaluation found that SFT plays an important and valued role in the management and monitoring of the Islands Programme. It was clear from the information available in monitoring reports that the programme manager follows the progress of projects funded by the Islands Programme and is aware of the challenges they are facing at every step.

7.19 However, the role of SFT in the Islands Programme goes beyond management and monitoring. Indeed, they play a role in the overall delivery of the programme by providing much needed capacity and capability to island local authorities. All the local authority officials who took part in the evaluation were very positive about their relationship with the SFT programme manager, highlighting the helpful input and support they have received from her and others at SFT to keep their projects moving forward.

7.20 Investment Panel members also praised the programme manager in relation to the quality of support given to the bid assessment process.

7.21 In whatever choices the Scottish Government may make regarding future funding mechanisms for the Islands Programme, it will be important to retain this role in supporting the programme.

Features of an optimal Islands Programme funding mechanism

7.22 In commissioning this evaluation, the Scottish Government had a specific interest in understanding the effectiveness of the two different funding mechanisms used to disburse Islands Programme funding between 2021/2022 and 2024/25 – direct allocation to local authorities and competitive bidding by local authorities – as well as a third possible mechanism, which would involve inviting community organisations to bid for funds.

7.23 However, in exploring stakeholders’ views and experiences of these mechanisms, and of other programmes that fund capital investments, it became clear that there is nothing about any particular method for disbursing funding that makes one method inherently more effective than another. Indeed, stakeholders said that it is often what happens before and after the funding is given that enables a capital programme to achieve its intended positive impact.

7.24 In this context, stakeholders emphasised the pivotal importance not only of providing funding for capital infrastructure projects, but also of ensuring the availability of the necessary human capacity (knowledge, expertise, capability etc.) to develop, manage and deliver those projects.

7.25 Thus, in relation to the Islands Programme, the process of disbursing funding would ideally sit within a wider system in which:

• Each island area has a plan for infrastructure development that is based on meaningful engagement with local communities, is fully aligned with national policy objectives, and has a clear sense of the priority attached to each project
• There is multi-year funding which local areas can anticipate and bid for when their projects are ready
• Local authorities operate a live tracking system holding up-to-date details in relation to a pipeline of projects, and manage a process for moving (other) projects forward where delays occur in those at the top of the queue
• There is sufficient time, capacity and capability – both within local authorities and within community organisations – to enable the successful development and delivery of projects
• There is sufficient access to the range of contractors required for planning, design and construction
• There is flexibility in how the funding may be spent – both in terms of what it is spent on, but also in terms of the timetable within which it should be spent
• There is a robust management and monitoring framework in place to identify and address issues as they arise.

Conclusions

7.26 Overall, stakeholders thought that the current competitive bidding process was working reasonably well. Local authorities, Investment Panel members, and representatives of SFT said that local authorities are now familiar with the application and assessment process. Community representatives (in particular, those whose projects had received Islands Programme funding) were largely positive about the experience of working with their local authorities in developing applications. In general, local authorities trust the decision making of the Investment Panel and also appreciate and value the support they receive from SFT.

7.27 At the same time, however, local authorities and community representatives do not, by any means, see the current process as ideal. These stakeholders find the competitive process demanding and resource intensive. They also think that the unpredictability and inconsistency of the annual funding cycle, and the tight timescales associated with the process add further challenges. In addition, some local authorities questioned the appropriateness of using a competitive process to allocate capital funding to island communities given the clear need for improvements in infrastructure and funding to support this.

7.28 Stakeholders made a range of suggestions for relatively small improvements that could be made to the current competitive bidding process. These included (i) further simplification of the application form and guidance, (ii) rationalising the range of objectives and criteria, (iii) offering more explanation of what information is being sought for each question, (iv) ensuring that only those applications that are eligible for funding are passed to the Investment Panel for assessment, (v) providing fuller feedback on unsuccessful applications, and (vi) reviewing panel induction processes. These changes could be implemented by Scottish Government in relation to a potential 2026/27 funding round.

7.29 More importantly, local authorities emphasised the need for a more consistent timetable for the Islands Programme which maximises the time available to them for application development and committing of expenditure.

7.30 The findings of this evaluation indicate that local authorities continue to prefer a direct allocation mechanism, but not one which uses the allocation methodology used in Year 1. There was limited support from other stakeholders for a direct allocation mechanism. Those who did support it highlighted the potential for it to be used to leverage capital funding from other sources. These stakeholders also suggested that local authorities would simply need to be given a clear set of principles / criteria for spending their allocations. They did, however, note that a competitive bid mechanism gave some local authorities the opportunity to obtain more funding than they would get through any direct allocation mechanism.

7.31 Among other non-local authority stakeholders, there was a general concern that spending would be less ‘evidence-based’ and, potentially, less likely to align with national policy priorities, if Islands Programme funding were given to local authorities as a direct allocation.

7.32 There was limited appetite for introducing an approach that would involve direct bidding by communities. Stakeholders generally saw this option as not strategic; resource intensive to administer and manage; and likely to disadvantage communities with the least capacity.

7.33 An important message from this evaluation is that there is a shortage of capacity and capability to deliver infrastructure projects in the islands. This challenge cannot be addressed simply by finding more efficient ways to disburse capital funding or by improving the process of awarding grants to the ‘best’ projects.

7.34 The more fundamental changes which local authorities and community organisations wished to see would require a broader review of how the Islands Programme operates – not solely limited to the disbursement mechanism. This would be informed by the findings of this evaluation but would also seek to address (i) the underlying issues in relation to capacity and capability, and (ii) the extent to which the Islands Programme can be re-engineered to allow greater flexibility and coordination across the various funding streams which exist.

7.35 If increased funding could be made available through the Islands Programme, there would be merit in considering a hybrid approach. This could involve making part of the fund available to local authorities as a direct allocation and part through a competitive bidding process – similar to the approach taken by the Scottish Government’s Place-based Investment Fund (of which RCGF is the competitive arm). In the context of the Islands Programme, it could be specified that the direct allocation must be used for specific purposes, such as capacity building among local authorities and / or communities. Alternatively, it could be used to fund small-scale project costs relating to, for example, feasibility studies, design work, the development of business plans, etc. The remainder of the fund could be delivered through a competitive bid process that gives local authorities the opportunity to obtain funding for larger-scale projects.

7.36 Finally, this evaluation has found that there is no one best disbursement mechanism for Islands Programme Funding. There are strengths and weaknesses, pros and cons, associated with every mechanism. Maximum impact from a capital funding programme will be achieved not simply through the mechanism for disbursing funds, but through an increased capacity and capability for developing and managing capital projects on the islands.