A funding lifeline may have been thrown at the cash-strapped Northern Isles air and ferry services.

More than £500,000 - earmarked for improving the quality of life in Orkney - could be used to fill this year’s cash shortfall for the transport services.

Orkney’s interim director of finance, Mr Albert Tait, said it could be one issue for consideration by elected members.

“I have no doubt some members may well be interested in that matter. I do not see that as being relevant given that it is only one year’s money and the ferries issue is ongoing,” he said. “There is no doubt that it could come into consideration but there is a long way to go on the shortfall. The council want to press for specific recognition of this shortfall.”

The cash windfall of £571,000, announced last week, was part of a £95 million boost for councils across Scotland aimed at a wide range of initiatives, including improving roads, cleaning up communities, home safety and free leisure access for young people.

The council have to submit their proposals for use of the cash to the Scottish Executive by July 24.

“What they are looking for on July 24 is acceptance that the council will want to use the money, and general indicators where the money will be used. That does not give us much time,” Mr Tait added.

Orkney Islands Council said recently that they may have to look at cutbacks to the North Isles ferry service – possibly involving tying up one vessel - unless the Scottish Executive came up with £500,000 to keep the inter-island transport services afloat.

The inter-island air services operated by Loganair are £189,000 over budget for the coming 2002/03 year. The sea links maintained by Orkney Ferries require an extra £338,000.

The OIC are awaiting a response from the Scottish Executive to a letter they sent in April asking for more assistance with funding what are regarded as lifeline services.

The council say that the money is needed now to prevent the cutbacks from being considered, but they are also looking for long-term support from the Executive and a change in the way the services are funded.

Only last month councillors did recommend that Loganair be awarded a two-year contract to provide Orkney’s inter-island air service – despite still having to find the cash to run it.