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The management of the Crown Estate - Treasury Contents


Extent of holdings

101. Since 2002 the CEC have ceased to treat Scotland as a separate business division. Nonetheless, we have opted to consider the CEC's activities in Scotland separately both because of the distinctive character of their holding and because of the number of submissions we received expressing concern about the CEC's lack of accountability in Scotland.

102. In 2009, the CEC produced a Scotland Report which provided financial figures for the operations of their Marine, Rural and Urban Estates in Scotland. In total, the Crown Estate in Scotland accounts for 4% of the value of the overall Estate and 6% of revenue—so the CEC's interests in Scotland represent only a very small part of the UK-wide Crown Estate. In Scotland, the CEC's marine activities produced the largest gross revenue surplus (£7.4 million in 2008-09), and their rural holdings had the highest property value (£109.6 million in 2008-09).

103. The Crown property, rights and interests in Scotland that are managed by the CEC are legally different from those forming part of the Crown Estate in the rest of the UK. This is because Crown property rights in Scotland are defined and governed by Scots law, including Scotland's Crown rights in Scotland's territorial seabed and continental shelf area. The distinct character of the Crown rights in Scotland is also reflected in Crown rights that have no equivalents elsewhere—as shown in the CEC's schedule in the Appendix. The position is recognised by the inclusion of provisions relating to the Secretary of State for Scotland in the Crown Estate Act 1961 and the designation of one of the CEC Board members as 'Scottish Commissioner.'

104. Devolution is another important part of the different context in Scotland. As a result of the Scotland Act 1998, the Scottish Parliament can legislate over the extent and nature of Crown property rights in Scotland, legislate to regulate the use of land and property rights and issue guidance on standards of good management. However, the Act reserved the CEC's administration of Scotland's Crown property rights that make up the Crown Estate in Scotland, and their revenue to Westminster. The Secretary of State for Scotland therefore remains the Minister responsible for the CEC's operations in Scotland.

Issues at stake

105. As we saw in our discussion on the Marine Estate, the Scottish councils who gave evidence to us were frustrated with the state of their relationship with the CEC. The Highlands and Islands councils published a report in 2007 entitled "The Crown Estate in Scotland—New Opportunities for Public Benefits"[165] that called for a full review of the Crown Estate in Scotland. In his evidence to us, Councillor Foxley, Leader of Highland Council, told us bluntly that "the management of the Crown Estate should be managed in Scotland...The management should be transferred to Scotland and then down to the local authorities over certain aspects to get that management right."[166] He acknowledged, however, that little had changed since the publication of the report. Mr Maciver of Western Isles Council further observed that "there has been a breakdown in relationships."[167]

106. In similar vein, Ms Linda Rosborough, Head of Marine Planning and Policy, Scottish Government, affirmed the view of the Scotland Government that the optimum means of improving relations with the CEC in Scotland would be through the "administration of the Crown Estate to happen within Scotland under a different constitutional arrangement."[168] Short of this though, she told us that "we are looking for additional leverage over the administration of the Crown Estate in Scotland."[169] She acknowledged that "I think the Crown Estate has improved in terms of the visibility of the work they are doing in terms of additional investment,"[170] but felt that problems remained with regard to their accountability, engagement and involvement in Scottish affairs, observing that "the Crown Estate is quite an Anglo-centric body as it stands at the moment."[171] To counter-balance this, she stressed the importance, "if we continue with the current arrangement"[172] that there is a [Scottish] Commissioner who has knowledge of Scottish interests" particularly "given that half the seas around the UK are Scottish seas".[173]

107. The CEC have a different view of their Scottish interests and relationships. Their Scottish Report states that they are a commercial organisation "but with a difference", and puts great emphasis on the long-term economic benefits they bring to Scotland and "the strengths of the partnerships we have formed". They highlight in particular their major commitment of time and resources to support the growth of marine renewables, their £6 million investment over the last three years in ports, harbours and marinas, their support for fish farming, and support for Scottish agriculture. They also emphasise their commitment to improving relationships in Scotland, citing by way of example the Scottish Liaison Group that they have set up to "help us work more effectively with our partners in Scotland."[174]

Calman Report and beyond

108. In 2009, the same issues were considered within the wider context of the inquiry of the Commission on Scottish Devolution chaired by Professor Calman. The Report acknowledged that the Commission had received evidence calling for the CEC to be devolved "to enable the Crown Estate to be made more accountable and to help ensure that its Scottish assets are managed in Scotland's interests".[175] It noted, too, arguments that "the current management of the Crown Estate focuses too narrowly on securing revenue, leading to unnecessarily high charges, and that this surplus is not fully re-invested into Scotland."[176] It observed though that "an important counter-argument to this, however, is the benefits that the Crown Estate in Scotland derives from being part of a much wider (and more profitable) Estate" and that "Crown Estate profits which flow to the UK Treasury are also used for the benefit of all UK taxpayers."[177].

109. In sum, the Calman Report did not consider that legislative competence over the administration of the Crown Estate in Scotland should be devolved. It did however "take note of the strength of feeling in the evidence submitted that the Crown Estate in Scotland has given too great a priority to maximising income". This of course is precisely what we also found in relation to the evidence we received on the Urban and Marine Estates. The Calman report recommended, therefore, that:

    The Secretary of State for Scotland should more actively exercise his powers of direction under the Crown Estate Act 1961, with the additional requirement for formal consultation with Scottish Ministers in doing so, to ensure that the Crown Estate Commissioners, in discharging their statutory duties, have due regard to Scottish interests and the wider context within which the Crown estate in Scotland operates.[178]

110. The Calman Report also believed that "it would be appropriate for the recommendation as to the appointment of a Scottish Crown Estate Commissioner to be made following formal consultation with Scottish Ministers",[179] a recommendation also subsequently accepted by the UK Government. This seems to us to be a welcome step in the direction of fostering a closer working relationship between the Scottish Government and the CEC. We consider though, given the strong cases made by both Scottish local and national Government, that further steps are also required. The Scottish Government saw merit in having a more formal memorandum of understanding or concordat with the CEC, and during oral evidence the CEC stated that they "would obviously be receptive to that if it was felt that would be helpful."[180] We also see merit in this. The extent of the Scottish Government's powers and responsibilities, including those over Scotland's marine environment and renewable energy development, mean that it is essential that there is a close and constructive working relationship between the CEC and the Scottish Government. Finally, we consider that in order to engage with the Scottish Government, and to adapt as necessary to the different public policy environment in Scotland, the CEC will need greatly to strengthen their management arrangements within Scotland.

111. The Government's response to the Calman Report agreed that the appointment of the Scottish Crown Estate Commissioner should be made following formal consultation with Scottish Ministers. We endorse this action as a means to improving the CEC's relationships in Scotland. We recommend, however, that this initiative be further strengthened through a concordat or memorandum of understanding between the Scottish Government and the CEC to consolidate their working relationship, and that the CEC greatly strengthen their management arrangements within Scotland to assist this process.

112. The UK Government rejected the Calman Commission recommendation that the Secretary of State for Scotland should, in consultation with Scottish Ministers, more actively exercise his powers of direction under the Crown Estate Act 1961, affirming only that "the Government recognises the case for proactive engagement with the Crown Estate in Scotland, and the Secretary of State does and will continue to engage on important issues as they arise, but that "the statutory powers of direction in the 1961 Act, a reserve power for use in extreme circumstances never used, remains a sanction of last resort."[181] We explore wider questions about the oversight role of Government in relation to the CEC, and the scope of its powers of direction, in the next section.

165   The Report of the Crown Estate Review Working Group, The Crown Estate in Scotland: New opportunities for public benefits, December 2006. Our Specialist Adviser was also the Specialist Adviser for the Councils' Report. Back

166   Q 34 Back

167   Q 37 Back

168   Q 67 Back

169   Q 67 Back

170   Q 71 Back

171   Q 78 Back

172   Q 78 Back

173   Q 78 Back

174   The Crown Estate, Scotland Report 2009, July 2009, Overview Back

175   Calman Commission on Scottish Devolution, Serving Scotland Better: Scotland and the UK in the 21st century, June 2009,p 179 Back

176   Ibid., p 180 Back

177   Calman Commission on Scottish Devolution, Serving Scotland Better: Scotland and the UK in the 21st century, June 2009,p 179 Back

178   Ibid., p 181 Back

179   Ibid., p 181 Back

180   Q 152 Back

181   Scotland Office, Scotland's Future in the UK: building on ten years of Scottish devolution, CM 7738, November 2008, p 28 Back

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