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The management of the Crown Estate - Treasury Contents


5  THE RURAL ESTATE

Extent of holdings

52. The Rural Estate, like the Urban Estate, is long-standing core CEC business. It has suffered less from the severe economic downturn than the Urban Estate. In 2008-09 it accounted for £920 million or 16% of the value of the Crown Estate and E26.7 million or 9% of its revenue. Over the last ten years, rural property has usually accounted for 10-13% of value and 8-9% of revenue. Within this business division, the CEC manage 146,000 hectares of agricultural land, forests and residential and commercial property spread across 22 counties in England, with further holdings in Scotland and Wales, making it one of the largest rural estates in the UK. The agricultural sector comprises 450 principal farm holdings and 770 residential tenancies. In common with some large commercial landowners, the CEC manage their rural property portfolio through agents.

Performance

53. The 2009 CEC Annual Report, reported the rural estate "as having enjoyed a positive year, despite the poor conditions in the UK economy. Revenue was £26.7 million, up 18.9% on the previous year. The property value of the Rural Estate was £919.5 million, an increase of 1.9% over 2007-08."[72] Their written evidence also stated that "as part of our stewardship programme, we reached, a year ahead of schedule, the government target that 95% of our 145 Sites of Special Scientific Interest (SSSI) [should be] in 'favourable' or 'recovering' condition."[73]

54. The evidence we received from other parties about the performance of the CEC's Rural Estate was predominantly very positive. The Country Land and Business Association, which counts the CEC as a member, told us that they:

    succeed in being an exemplary landowner. Their motives, in common with most private landowners are to preserve and grow the value of their estate, manage it in an economically, environmentally and socially sustainable way producing a good return. Their financial results certainly place them amongst the best-performing estates.[74]

Mr James Howe, who gave oral evidence as a representative of the Royal Institution of Chartered Surveyors but was also able to draw on his role as Rural Assets Manager for the Church Commissioners for England, agreed with this description. He considered that it made sense for the CEC to use agents because:

    the estates of the Crown are spread fairly thinly throughout the whole of England and also into Scotland and in order to directly employ it is not always, I think, cost-effective. So to have the benefit of local knowledge and to have people based locally under a contract of employment which is regularly tested against other comparable firms is a very satisfactory way of proceeding.[75]

Natural England "noted that closer relationships are being developed with tenants," explaining that previously all contact with tenants had been directed through the agents but "Crown Estate is now seeking to establish more direct tenant engagement." Natural England wanted to see this further developed "so that Crown Estate is a more active partner in helping its tenants to achieve more sustainable agriculture."[76] Finally, Mr Steven Bee, Director of Planning and Development, English Heritage, affirmed that the CEC "work well with us"[77] and indicated that he was not aware of any issues with other key rural stakeholders, a position also endorsed by Mr Howe.

55. In a submission which complimented the CEC on the high standards of their management in environmentally designated areas, Natural England noted that the CEC are "technically exempt from the duty placed on public bodies to have regard to the purposes of National Park and Areas of Outstanding Beauty Designations" and that there is also "a lack of legal clarity" whether the CEC are required as a public body to meet the Government's condition targets for all Sites of Scientific Interest on the Crown Estate. In the interest of transparency, we recommend that the CEC publish a list of the statutory environmental designations from which they are exempt. They should specify where they have undertaken to fulfil the duties placed on other public bodies by the legislation.

56. In their written evidence, the National Farmers Union (NFU) were a bit more critical, suggesting that the CEC should do more to assist agricultural tenants who want to retire, but could not afford to move off their farm. The NFU told us that "we believe that the Crown Estate has a social responsibility in acting on behalf of the taxpayer to promote best practice in its work on assisting those tenants that wish to retire from agriculture."[78] Mr Howe was unable to comment directly on CEC performance in this area, but did confirm that "it is certainly an industry-wide concern that there are farm tenants who are in effect trapped within their farm tenancies because they cannot afford to buy retirement dwellings and to have money to live from."[79] He explained that the Church Commissioners actively assist in comparable cases by purchasing a house and offering a life-long tenancy agreement "on a rent between a fair rent and a market rent."[80]The Church Commissioners can then rent the farm they have vacated to a new entrant.

57. We subsequently put it to Mr Bright that his organisation should be doing more for tenant farmers who wish to retire. He replied that:

    [ ... ] We have a policy which is to enable retirement with dignity so that farmers, when they wish to retire, are able to do so. The first thing that we do—and it is what happens in the majority of cases—is that we have a long term relationship with our agricultural tenants and we take a close interest in their business. What we try to do is ensure that they are building up within their businesses sufficient profits, a revenue surplus if you like, so that when the time comes to retire they have the wherewithal to enable them to find alternative accommodation.[81]

When we expressed some scepticism as to whether this policy was sufficient, given the challenging economic conditions facing tenant farmers, and the price of rural property, he went on to explain that where tenant farmers were unable to afford a retirement property on their own, the CEC would "put in an equity stake"[82] to assist, or look to see if it could make available a farm cottage.

Future direction

58. In their written evidence, the CEC identified the principal challenges for their Rural Estate as being:

  • Restricted scope for tactical trading of the portfolio, given the characteristics of agricultural investment;
  • The scope for maximising income is limited by the legislation governing agricultural tenancies; and,
  • Releasing land for development in ways that are sensitive to local opinion and environmental concerns.

They explained they were looking to "ensure that we are in a position to realise profits when opportunities arise" and to work more closely with tenants "to add value to their businesses and create new opportunities to our mutual benefit."[83]

59. Natural England believe that CEC should also play more of a role in enhancing the landscape. In their evidence, they proposed that the CEC "should now begin to explore the potential for achieving more for the natural environment by working at a landscape scale, with neighbouring landowners and regional partners to deliver specific outcomes, and developing innovative and cost effective ways of achieving them."[84]

60. The proposal from Natural England that the CEC should play more of a role in enhancing the landscape, reflects an expectation that we came across frequently in our inquiry, that the CEC should as a public body help achieve wider public policy objectives. This again poses the question we have already raised in the urban environment—to what extent can and should the CEC accommodate wider public interests in rural areas as part of good management while also fulfilling their duty to maintain and enhance the value of the Crown Estate and the return obtained from it. We return to this theme in later sections.


72   The Crown Estate, Annual Report 2009, July 2009, p 18 Back

73   Ev 47 Back

74   Ev 38 Back

75   Q 118 Back

76   Ev 76 Back

77   Q 121 Back

78   Ev 74 Back

79   Q 124 Back

80   Q 125 Back

81   Q 204 Back

82   Q 210 Back

83   Ev 46 Back

84   Ev 78 Back


 
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