FOCUS: What future for the Highlands and Islands economy?

“Centralisation of public services has had a significant impact” – Faye MacLeod. Pic Willie Urquhart

FAYE MACLEOD, a local accountant who has worked extensively with the community development sector, argues that while the Highlands is a great place to live, it has looming challenges in terms of jobs, services, housing and demographics….. 

It’s a real privilege to live and raise my family in the Hebrides where we can still speak Gaelic on a daily basis, and to top it all, I have been able to pursue a fulfilling professional career through a locally based Chartered Accountancy practice supporting small businesses in the Highlands and Islands of Scotland with a super team of islanders.

Each morning looking out over Loch Snizort with the hills of Harris in the distance I know that the only congestion I will encounter on my short drive to work might be a stray sheep having found its way onto the main road.

If the weather is favourable, I can head off for a post-work hill walk to enjoy the fresh air and beautiful scenery while some of my more adventurous colleagues may be heading out on the water in Portree bay on their paddleboards.

Skye has a growing, but ageing, population Pic Willie Urquhart

The winter weather can be harsh, but when spring rears its head, it does not take long for us to forget the winter gales.

I fear that future generations will not have the opportunity to enjoy the island life that I have had, where for generations our families have clung onto these rocks in the ocean. That reality brings me great sadness.

We see headlines celebrating the fact that the population of Skye is increasing. However, the reality is that our young islanders are disappearing at a frightening rate with the Portree High School roll having fallen by almost 40 per cent to around 500 pupils in the last 20 years for example.

Is it little wonder then that the island has in the region of 1,700 job vacancies as reported in the last year?


The centralisation of public services has had a significant impact on the delivery of services to rural Scotland. But it is also indirectly contributing to the demise of rural communities by removing jobs and economically active citizens away from rural areas.

While this can indeed save the government money in terms of delivering services, it also skews the funding formula by supporting more allocation of taxpayers’ cash to urban Scotland.

The allocation of funding on a headcount basis is undermining rural Scotland and our islands are creaking as our vital infrastructure is neglected.

For example, a falling school roll will result in a proportional decrease in funding making it much more difficult to offer a broader range of subjects in a rural school. This also makes the area less attractive to families potentially looking to move there.

Is this a concerted policy to depopulate the Highlands and Islands by stealth? Or is it an unintended consequence of our policy makers not understanding rural Scotland?


‘Oh, but you are wrong’ I hear our policy makers cry, we have consulted with the people!

Yes, that is right, we have been inundated with consultation after consultation, and for those citizens working full time and who have a family to care for, it becomes a real struggle to keep up.

Not only that, but how much taxpayer cash is being spent on undertaking these consultations? 

Here is a selection of those that I have managed to respond to in the last year in addition to numerous HMRC consultations in my professional work:

  • Scottish Land Reform Bill
  • Community Wealth Building
  • Land Reform in a Net Zero Nation
  • Gaelic and Scots and a Scottish Languages Bill
  • National Gaelic Language Plan
  • National discussion on education
  • Highland Council’s Gaelic Language Plan 2023 – 2028
  • Scottish Highly Protected Marine Areas (HPMA)

These consultations can run to pages and pages of questions taking many hours to complete and I have heard from elderly people that they find it is too much or too difficult to complete and they have given up part way through.

Is it democratic to devise a feedback system that will only allow those who persevere with the process to contribute? It can often feel that the format of these consultations and the way the questions themselves are worded is in support of predetermined outcomes rather than genuine consultation.

This is particularly true of the contentious Highly Protected Marine Areas consultation. 


Islanders have looked after the land and the surrounding seas for many centuries through low impact and low density methods of crofting and fishing, yet there is now a sense that they are being punished for having looked after the environment themselves for all these years gone by.

City-based policy makers can quickly tick their environmental credential boxes by targeting areas that are already in decent shape and have low population density rather than tackling the real environmental problems that exist in our cities and industrialised areas. 

Fishing is still a key source of employment Pic Willie Urquhart

What measures will be taken to tackle or reverse pollution and seabed damage in the areas around our larger marine ports?

Instead, areas of low population density can be sacrificed so that this can enable offsetting of the polluting parts of the country which can then continue with business as usual.

This type of greenwashing is being imposed on rural communities through HPMAs, as well as the many examples we see of polluting businesses buying up large areas of Scotland for forestry development or delivering renewables projects to offset carbon rather than focus on minimising their existing negative impact on the environment.

Real environmental change will come from delivering carbon friendly projects as well as reducing the negative impact of polluting businesses but not if one simply cancels out the other by the one polluter.

On Skye there are plans to develop large scale industrialised wind farms. This will support the Scottish Government’s target for wind production by 2030, but despite all this mass wind production on Skye, we will continue to pay some of the highest electricity tariffs in the UK.

The industrialised landscape and damage to our existing carbon-storing peatland will be a permanent scar on the land we have preserved and looked after for many centuries.

Our natural resources will be used for the greater good of the UK and government environmental targets can be met. But sadly islanders are not afforded support in return, and could suffer greatly if there is a detrimental impact on the tourism industry that so many on Skye rely upon.


Our fellow islanders who are dependent on lifeline ferry services have been so badly let down due to a lack of foresight and planning over many years with the consequences now being felt.

I have had many worrying conversations with business owners who have been severely affected in Uist and Barra.

These islanders are operating businesses already on the margins of existence with their customer numbers often depending on the number of people who can get to the islands.

Reliable ferry services are vital for the island economy Pic Willie Urquhart

This is limited to the capacity of air and ferry services so to have this reduced further by regular ferry disruption and cancellation not only reduces the customer numbers in physical terms, but it also dents the confidence of travellers.

They want to know that they have some certainty of reaching their destination rather than the present CalMac lottery of will it or won’t it sail. 

I am aware of islanders who have already sold up and left the islands as the economic conditions are now too challenging for them to operate in. Many others are considering making the same difficult decision.


This is the tip of the iceberg for businesses who, let us not forget, are still impacted by Covid.

For a period of up to six years many of these businesses will be repaying the CIBLS and bounce back loans that they took to help their businesses survive the Covid lockdowns.

In addition, the reduction in the size of the labour market pool from Europe post-Brexit has had a significant impact on rural areas and the availability of staff to help run businesses.

They have become constrained in their ability to operate.

HPMAs could undermine the survival of our fishing industry as well as fish processors, agents, hauliers, and others indirectly reliant on this sector.

Other government initiatives such as the short term lets licences have imposed significant regulations on our hospitality sector where Covid recovery is still taking place.

And as if hospitality did not have enough to deal with, the ill-conceived Deposit Return Scheme is also being introduced without the infrastructure in place to support its implementation.

Businesses are also presently receiving correspondence telling them that the rateable value of their business premises is rising at the same time as the threshold for obtaining small business bonus relief is reducing.

The result is further significant cost increases for small businesses impacted at a time when the business sector is already under significant financial pressure.

Hoteliers in the Western Isles are particularly worried about these increasing costs when their ability to generate income is so severely affected by an unreliable ferry service.

It is hard as an islander not to feel that our very existence is under attack, or at best that our policymakers lack any understanding for the reality of rural life.

Urbanites are not best placed to tell islanders what is best for them in the same way that I would not feel that I am best placed to tell those in the cities how to live their lives, or to undermine their ability to live and work there.


On a positive note, however, the lack of public sector support and investment over the last 20 years has resulted in a community development sector across the Highland and Islands that is to be celebrated.

We see thriving community ownership in the Western Isles in particular, where 70 per cent of the population now live on community owned land, and across the Highlands and Islands we see community development trusts and charitable organisations delivering vital social, cultural, and economic services helping to keep people in our communities.

These organisations rely heavily on the support of volunteers and I am often astonished at how much these hardy volunteers and their supporters can deliver on a shoestring budget.

The public sector can take a leaf out of the community development book and learn something, particularly about the delivery of services in a cost effective way.

Renewables offer potential Pic Willie Urquhart

Where would the Highlands and Islands be without these organisations taking up the public sector slack?

It would be beneficial to see some of the public sector finances channelled in the direction of these front-line organisations and where possible to minimise the level of bureaucracy and red tape faced by our community development sector when they are looking for support from public agencies.

Employment of development officers for such organisations is often limited to short fixed-term contracts depending on the funding available. They would benefit from a more secure stream of funding to provide more certainty to the employees and organisations themselves.

Community-owned wind turbines inject 34 times the return per megawatt of output to their communities than externally-owned, large scale commercial wind turbine developments deliver to the communities they are developing projects in.

This is real community benefit and it would be great to see organisations able to generate renewable energy for the benefit of their own communities, as we have seen in the Western Isles.

On a smaller scale, on Skye we have micro-hydro schemes operating on a similar basis as the community owned-wind turbines and returning vital income back into their own island.

Enabling communities to generate their own energy locally can be delivered if government and regulatory bureaucracy would allow this to happen, but at present the electricity generated is simply fed into the National Grid and the turbines switched off when they produce too much electricity for the demand at that particular time.

The electricity producers do still get paid for this excess production resulting in electricity users paying a premium to produce renewable energy that is not always required.


Out of necessity, these community organisations are now having to turn their hand to delivering affordable homes.

Once again, the public sector has failed to deliver sufficient levels of housing to meet communities’ needs over the last 30 years.

A small scale housing development in Staffin Pic Staffin Community Trust

There are good examples of small-scale, community-delivered affordable housing at Ulva Ferry on Mull and in Staffin on Skye as well as many other communities at various stages in this same process.

This is no easy feat with many bureaucratic hurdles to overcome in terms of paperwork and the need to source funding to name but two.

While there is access to some public sector funding, these volunteer-led organisations are also expected to borrow significant sums of money.

The volunteer committees driving forward these projects are to be commended and admired for giving up so much of their personal time to support the survival of their local island communities.

While we are faced with challenging economic circumstances, the determination and steadfast nature of our islanders will continue to shine through, but we do need our policymakers to support rural Scotland and ensure that well-considered policies are constructed with sufficient resources and infrastructure provided to ensure the survival of rural communities.

Adequate infrastructure and support for the Highlands and Islands is not simply about financial cost to the government.

We must be aware that not supporting these remote areas will result in a real cost to the environment, language, culture and diversity by not recognising the importance of retaining a healthy rural population.

Faye MacLeod is Principal at Campbell Stewart MacLennan & Co, Chartered Accountants