Orkney Islands Council has welcomed confirmation of funding through the Scottish Government's Islands Programme Capital Funding Scheme to support the repurposing of St Rognvald House in Kirkwall as temporary accommodation for essential workers.

The award is part of the £3 million 2026-27 Islands Programme Fund being shared by 13 projects across 12 islands to help retain and attract people to live and work, delivering on the National Islands Plan published in February.

St Rognvald House will become vacant once residents transfer to the new Kirkjuvagr House care facility. The council plans to refurbish and adapt the building to host visiting agency staff who play a vital role in services across Orkney, particularly in social care within Orkney Health and Care.

Current proposals would create space for up to 39 people through a mix of ensuite and shared rooms, alongside communal kitchens and dining areas, laundry facilities and social spaces. The accommodation is intended as a short-term base for workers while easing pressure on the private rented housing market.

The project supports the council's Essential Workers Housing Strategy, which identifies the need for broader housing options for essential workers and key staff, and makes productive use of a council asset ahead of longer-term redevelopment for affordable housing.

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It is expected to improve recruitment and retention and reduce the significant costs currently associated with accommodating agency and temporary workers. Recent analysis indicates accommodation costs for agency staff within Orkney Health and Care alone are around £750,000 per year.

Following a visit to St Rognvald's House today, Health Secretary Angela Constance said: "It was great to visit St Rognvald's House today and hear about the exciting plans to repurpose the care home as accommodation for health and social care workers and move residents to the brand new Kirkjuvar House when work is complete.

"The funding announced today by the First Minister includes over £200,000 for this project which will also help release private rental properties back to the housing market for permanent Orkney residents and families.

"I am acutely aware that access to housing and accommodation can be a barrier in attracting workers to Orkney and our National Islands Plan puts an emphasis on population retention and attraction."

Council Leader, Councillor Heather Woodbridge, said: "We are delighted that the Scottish Government has recognised the importance of this project through the award of Islands Programme Capital Funding.

"Like many island communities, Orkney continues to face significant challenges in recruiting and retaining staff across a range of essential public services, and the availability of suitable accommodation is frequently identified as a barrier.

"This investment will allow us to make effective use of an existing Council building, providing much-needed temporary accommodation for key workers while helping to ease pressure on local housing supply.

"The project demonstrates how we can take an innovative approach to supporting our workforce, strengthening service delivery and ensuring our communities continue to receive the services they rely on. We are grateful to the Scottish Government for their support and look forward to progressing the development."

The council will now move to the next stages of project development, including final design work and delivery planning, with refurbishment expected to begin once the necessary approvals are secured.

St Rognvald House is identified in the council's Strategic Housing Investment Plan for future redevelopment into permanent affordable housing. Repurposing it in the interim will ensure the building continues to provide value to the community while supporting Orkney's workforce and public services.