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
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