Transport / Proposed future inter-island connectivity funding provides tunnel boost
IT HAS been estimated that it could cost Shetland Islands Council (SIC) around £15 million to get to the stage of being ready to build a tunnel.
And this could be helped by indications from the Scottish Government that a total of £26 million in capital funding is destined to come the SIC’s way for inter-island connectivity over the next four years.
Chief executive Maggie Sandison said subject to necessary budget approvals, the SIC stands to receive £3 million of this capital funding in 2026/27 after £10 million was given for the current financial year.
The £10 million given in 2025/26 is set to go towards a new ferry to add resilience to the council’s fleet.
But Sandison revealed that the Scottish Government has also indicated that it is ready to commit another £3 million of capital funding in 2027/28, £10 million in 2028/29 and £10 million in 2029/30 too.
This comes following discussions between the council and the government in ferry taskforce meetings.
Sandison said the indication of funding over the next four years gives the SIC the money needed for the next stage of its inter-island connectivity project, which is exploring the way forward for ferry routes in Shetland.
Among the consideration as the project progresses are tunnels for Yell, Unst, Whalsay and Bressay, with an outline business case set to come to councillors in June.
This report will also prioritise solutions for each route in order of delivery.
“If the council at that stage made a decision that a tunnel is the right solution, there’s a lot of work required between that decision and being able to start building a tunnel,” Sandison said.
She told Shetland News this week that the SIC has estimated that this would cost around £15 million to £16 million.
This would enable the SIC to proceed with work on elements such as ground investigations, design, consenting and land access.
With £26 million set to come the SIC’s way from 2026 through to 2030, this means there would be millions leftover, which could potentially be used for more new ferries.
A new relief ferry, set to be funded in the main thanks to the £10 million inter-island connectivity grant given in 2025/26, could be in service in 2027.
But Sandison suggested it could be around 2029/30 when the SIC needs funding for another new ferry.
She also said the political conversations the SIC has had with the Scottish Government over recent years have “transformed” as a result of the government’s changed stance on Shetland’s inter-island ferries.
This has gone from a “your ferries, your problem” position to a recognition that the council should receive financial support.
For the last few years, the SIC’s deficit from running its inter-island ferries has been fully covered through revenue funding from the Scottish Government.
Sandison confirmed this is set to continue in 2026/27, with an uplift requested by the SIC factored in too.
The chief executive said the total amount due to be received for operating the ferry service in the next financial year will be around £27 million.
This has been included in the Scottish Government’s draft budget for 2026/27, which is set to be voted on by MSPs next month.
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