Council / Rural shop support scheme to continue despite funding stream stopping
A SHETLAND Islands Council (SIC) scheme offering capital grants to rural shops is to continue despite its original funding source coming to an end.
The Shetland Rural Retail Services Scheme was first introduced in 2023, using money from Shetland’s allocation of the UK Government’s Shared Prosperity Fund.
But, much to the disappointment of councillors, Shetland stands to receive nothing from the prosperity fund’s successor, the Local Growth Fund.
Despite this, councillors have agreed to continue the rural retail grant scheme into 2026/27 using funds from the SIC’s economic development budget instead.
However, the scheme will run with a reduced budget of £40,000 a year.
The scheme has provided grants up to a maximum of £10,000 to shops outside of Lerwick.
Nearly £170,000 has been awarded to shops since 2023, supporting projects like new fridges and freezers, energy upgrades and new equipment to expand services.
At a meeting of the SIC’s development committee on Wednesday, councillors were happy to see the scheme continue.
Elected members praised not only local shops’ service during times of disruption – such as the Covid pandemic or ferry cancellations – but also the fact that they often act as a social hub too.
A report to councillors said the scheme is “highly valued” by local shops.
“Nearly all shops stated that the summer of 2025 had been a very good in terms of sales,” it added.
“One shop had indicated this was the first time in years if felt like the shop was ‘going good’, and another said the improvements made through the grant had nearly doubled income.
“Many shops which connected to the scheme have been referred to Business Energy Scotland for energy audits, to identify potential savings.
“Notably, two shops, tied into high energy tariffs, were encouraged to renegotiate their energy deals which nearly halved the rates being paid. For both, this should move them from an annual loss to profit making position.
“Some shops are still struggling to break even and continue to be supported further through Business Gateway and other services.”
However Lerwick South member Cecil Smith said although new equipment is welcome, a recurring issue for small businesses and shops is the revenue cost.
Economic development manager Tommy Coutts said the revised guidance for the scheme includes the opportunity for limited revenue support, such as staff training for electronic point of sale or customer service.
“From a policy point of view I would advise against the council getting into providing revenue and running cost top-ups to businesses,” he said.
Coutts said for a start the SIC would not have sufficient budget for this, and added that revenue top-ups to keep businesses surviving would be “problematic”.
He added that the retail scheme was aimed at improving rural shops’ sustainability through actions like reducing energy costs or increasing footfall.
Coutts also said the decision not to award the Highlands and Islands region money through the UK Government’s Local Growth Fund was based on calculations relating to gross domestic household income.
With gross domestic household income a national threshold, he said the council has made representation to government around the extra costs that come with living in different regions of the country.
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