The council is making an urgent plea to the UK government after it emerged none of its local growth fund (LGF) would be allocated to Shetland – or any part of the Highlands and Islands – for the next three years.

The LGF was introduced as the successor to the UK shared prosperity fund, created following the UK’s departure from the EU.

Its purpose was to strengthen local economies and build more resilient communities, and it was designed to help address the loss of European funding for local projects and services in the country’s most economically challenged peripheral areas.

It is now due to end on 31st March.

Council leader Emma Macdonald is writing to the Secretary of State for Scotland, Douglas Alexander, along with colleagues in Orkney and the Western Isles, highlighting the urgent need for him to reconsider his decision, and to recognise the impact of the loss of funding on Scotland’s most peripheral areas.

“It’s essential that we receive continued support from the UK government and that at the very least there is a transitional period, rather than a sharp stop to this funding, at the end of March.

“Since 2022, nearly £2.5 million in funding has helped us deliver essential services in our local community, focussing on the most vulnerable individuals to reduce inequality and disadvantage.

“This has included helping people into employment, expanding adult learning opportunities, reskilling and upskilling the local workforce to address skills shortages, and sustaining vital rural retail services.

“All regions in Scotland should be able to benefit from the local growth fund to help contribute to and drive economic growth.

“It appears that the UK government’s methodology for calculating where and how much money is allocated does not recognise the high cost of living faced by islanders.

“We have repeatedly highlighted that our cost of living can be around 30 per cent higher than in other areas, but once again this appears to have been left out of the equation.

“We are extremely disappointed to see that, once again, post-Brexit economic policy will disadvantage remote and rural areas which were previously supported under EU policy.”

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