Scottish Affairs - Minutes of EvidenceHC 1117

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House of COMMONS







GARETH WILLIAMS and andrew jamieson

Evidence heard in Public Questions 437 - 598



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Oral Evidence

Taken before the Scottish Affairs Committee

on Wednesday 7 December 2011

Members present:

Mr Ian Davidson (Chair)

Fiona Bruce

Jim McGovern

Iain McKenzie

Graeme Morrice

David Mowat

Mr Alan Reid

Lindsay Roy


Examination of Witnesses

Witnesses: Lorne MacLeod, Community Land Scotland, and Andy Wightman gave evidence.

Q437 Chair: If we may make a start, I welcome both of you to this meeting of the Scottish Affairs Select Committee. We are continuing our evidence sessions on the Crown Estate in Scotland. I am conscious that we have been around and about and met a number of people at various locations informally, but we thought it was important also to have formal sessions. As you will appreciate, discussions have moved on a bit from the time some of the written evidence was submitted. Therefore, we want to explore some of the detail rather than the broad sweep. The Committee has come to the view that the status quo is not defensible, and we are aware of many of the iniquities of the Crown Estate and the way they deal with people, and so on. We do not want to labour all of that unnecessarily.

Perhaps I may start off by asking Mr Wightman a question. Last time you gave evidence to us I think you said that the Crown Estate should simply be devolved to the Scottish Parliament and they could dispose of it as they saw fit from there. Has anything that has happened in the last year either influenced or expanded your view on these matters?

Andy Wightman: The political situation in Scotland has changed, and that in a sense has created a higher profile for the issue. The Scottish Government have made this one of the things they wish to pursue. In that context, I have certainly been discussing the matter with a wide range of people over the last few months. I suppose the one thing that has changed is that there is now a consensus that the status quo is not defensible and we need some form of change. Other than that, my evidence stands; nothing changes materially from that.

Q438 Chair: Mr MacLeod, you suggest that the same sort of change is necessary. In your written evidence you suggested that it should be devolved to the Scottish Parliament. Is that still your view?

Lorne MacLeod: Our view is very much that there should be delegation to the local level-to community development bodies and landowners. Where they do not exist, the powers should be given to local authorities. Whatever the initial stage is, we are not particularly hung up on whether it is Westminster or Holyrood. We are keen to see delegation of powers to the local level, be it community bodies or local authorities.

Q439 Lindsay Roy: Mr Wightman, is that something you have also picked up in your discussions?

Andy Wightman: I have always been an advocate of far greater local control of land and all sorts of natural resources, including public land.

Q440 Lindsay Roy: So, greater input at a local level is something that has come through in your discussions.

Andy Wightman: Yes.

Q441 Chair: We are of the view that we want to have further devolution and decentralisation. We want to explore with you how some of this can be done in practice. Mr MacLeod, you have mentioned local authorities, community land structures and so on, and, Mr Wightman, you have also mentioned things along those lines. It would be helpful if you could clarify for us your view as to how the dividing line should be drawn. What should be going where and to whom in terms of both power over it and the revenue from it? The Committee are minded not simply to say that this is a whole raft of responsibilities that ought to be sorted out by somebody else and the Scottish Parliament can deal with it, but to make quite firm and clear recommendations about what we believe should go where. Having seen some of what has happened under the Scottish Parliament, we are anxious that there is a tendency for powers to be sucked into Edinburgh. When we were in Scrabster, for example, we heard strong opposition to the idea that powers should be given to Inverness because they wanted it for Scrabster and far less Holyrood. All of that raises the question of what is divided between whom and how, and that is what we want your evidence upon now. Perhaps Mr MacLeod could go first.

Lorne MacLeod: Our organisation represents all the community landowners, as you know, and 500,000 acres, which are mostly island or coastal communities. We feel that our powers, such as foreshore rights, should be delegated to the community landowners where they do not already have them. In addition, things like licensing powers for coastal erosion works and the grant of licences for fish farms or shellfish farms should be delegated to the community body. We are also talking about licensing of the sea bed.

To give an illustration, one of our members is Glenelg and Arnisdale Development Trust, which is situated in the narrows between the Isle of Skye and the mainland. There are considerable tidal flows there between the two bits of land and considerable potential for a tidal energy development. One of their difficulties is that at the moment they have been bypassed by the Crown Estate. They tried to move forward discussions with the Crown Estate, but they had said they would speak only to developers. One of the difficulties is that a very remote and fragile community needs a seat at the table to become part of a development such as that. It so happens that they are now in discussion with a potential developer who wants to work very closely with the community. Those are the kinds of powers I would wish to see delegated to communities at the local level.

Q442 Jim McGovern: Thanks for coming here and welcome. I get the impression both of you feel that the Crown Estate Commission should no longer be a function of the UK Government. Do you have a preference as to where it should go? Putting that question to both of you, should it go to local government, community structures or straight to Holyrood?

Lorne MacLeod: I would very much like to see delegation to the more local level. I do not have particular expertise to know about the difference between whether it should remain at Westminster or Holyrood. We have a mandate on behalf of our members to push for local control, and that is what we are all about. We represent all the community landowners and 500,000 acres of coastal island communities. We would like to see the delegation of responsibilities to the local community bodies but, where they do not exist, those powers should go to the local authority concerned.

Q443 Chair: Your line is that, wherever possible, everything would go to the community land structure and it would go to the local authority only where that did not exist,

Lorne MacLeod: Yes. I would have to add that undoubtedly there will be particular situations. I give the example of a very large development like the Tiree Array. That is so large and goes across many local authority boundaries, and many communities will be able to see the development. I think it is of the order of £6 billion. Something like that would, presumably, have to be considered at a much higher level, but hopefully some of the funds would be disbursed from the communities affected.

Q444 Chair: We will come to that in a moment. Leaving aside big, major projects, we want to be clear that, essentially, you are saying that the community land structure should get the responsibility and revenue, and it is only where that is missing that it would fall to the local authority.

Lorne MacLeod: Yes, indeed. If in future a community body was to develop, sought those powers and had the capacity to take it on, it would enter into discussions with the local authority about passing on those powers.

Q445 Chair: To follow up the point about capacity, there is a possible difficulty about some community land organisations dealing with multinationals and not having the professional expertise that the Crown Estate argue they have.

Lorne MacLeod: To give an illustration, the body of which I am a member is Sealladh na Beinne Moire, which is an estate of 93,000 acres covering the islands of Eriskay, South Uist and Benbecula. At the moment, we have a £1 million turnover business. We have 24 members of staff. We are involved in a £10 million project to deliver a 6.9 MW turbine development that will be wholly owned by the community. In addition, we are undertaking a £10 million development of Lochboisdale harbour to create 52 pontoon berths, a new fisheries pier and industrial and commercial land. I argue very strongly that we and many of our members have the capacity to take on these powers. We are in constant discussion with commercial developers and various other business developments.

Q446 Chair: Does that apply to all of your members?

Lorne MacLeod: Another one I am familiar with, to give you an illustration, is the Island of Gigha. It also has a turnover of £1 million and 20 staff. They run the only community-owned hotel in the United Kingdom and their own wind farm.

Q447 Chair: I understand that some of them have that expertise. What is the smallest?

Lorne MacLeod: The smallest members are probably pre-buyout. To come back to that particular point, a way forward would be similar to the early days when many of our members had to apply to get the land reform powers. We had to submit the postcode areas that it covered and show a level of governance in terms of our memorandum and articles of association to ensure there was full democracy within that. There is also a clause within our memorandum and articles which allows a dissolution. In such instances the balance of assets would be passed to another local community body. I think there could be a process whereby community bodies could apply to take these powers, and they would have to demonstrate the capacity. Many organisations are already governed by the Office of the Scottish Charity Regulator, as well as the Land Reform Department of the Scottish Parliament.

Q448 Chair: If they did not reach that level, it would fall back to the local authority.

Lorne MacLeod: If they did not reach the threshold, yes, indeed.

Q449 Chair: Andy, do you want to respond to Jim’s question?

Andy Wightman: Yes. The Crown Estate in Scotland is public land governed by Scots law. It is the administration of property rights with which we are concerned here. They are currently administered by the Crown Estate Commissioners. The administration of those rights is a reserved matter. I believe that should be devolved, and, therefore, the Crown Estate Commission should no longer have any role at all in Scotland. As to what happens to the different rights, that will depend on the rights themselves. For example, at one extreme we could just make oysters wild animals and there would be no issue. For example, on the rural estates there would be solutions to be looked at. A number of tenants want to buy the land. On places like Princes Street Gardens, let’s just hand it over to the town council.

On the bigger issue of the sea bed and foreshore, this is national public land. I am not sure whether Community Land Scotland are advocating that some of their members should be able to take on the ownership or administrations of the rights of that public land. That would be quite a dramatic change. There is no other public land where the Government allow communities simply to manage them. The Forestry Commission will not allow communities just to manage the public forest estate; it demands rental, for example. There are some practical problems there.

My ideal solution is to see the introduction in Scotland of real local government. At the moment, we are the most centralised governance in Europe. We have 32 very large local authorities. For example, the Highland Council is the size of Belgium. Belgium has 589 municipalities; Norway has 431 communes. We need a statutory governance structure at a much more local level, and that is where eventually a lot of the powers of administering these rights, and receiving a proportion of the benefits, would flow. That is a big debate, but it is a little messy to think, at least as far as concerns the rights, that community landowners and others on an ad hoc basis can administer these rights, and everything else should be administered by local authorities. In the current structure, ultimately it should probably be local authorities who administer these rights within a national strategic plan, which Marine Scotland are already drawing up.

As to local authorities, the interests of communities as they stand at the moment-they do not have any form of statutory representation-should be to do with the question of benefit sharing and revenues. But when it comes to the administration and exercise of those rights, the granting of leases and all the rest of it by community landowners, I remain to be convinced. It may well be the case, but I think it would be presumptuous to go straight into a situation where community landowners are basically given these rights. Why not other landowners? Ideally, it should be administered by statutory local government, which in my view should be much more local than it is, but that is another debate.

Q450 Chair: Unfortunately, we are not going to reorganise local government at the moment.

Andy Wightman: Of course not.

Q451 Chair: Therefore, we have to operate within the situation we have.

Andy Wightman: Exactly.

Q452 Chair: Unless I am mistaken, you are saying that you would want these rights and responsibilities passed to local government.

Andy Wightman: To be administered by local government. There is an issue about the national administration of these rights. I do not think they should all be handed over completely to local government because there are national interests in terms of the exploitation of important areas of public land, principally the territorial offshore seas. There needs to be a national body to have oversight of that. I would favour some kind of public lands trust which would be the national body to administer these rights.

Q453 Chair: How would we guarantee that it did not simply become a black hole, as it were, and you just ended up replicating the Crown Estate? It would just be the Scottish Crown Estate called something different. How do you make sure there are powers going downwards? What would then be the division between those held at national and local authority level? Presumably, under your scheme, the local authority would be able, if it wished, to delegate responsibilities to community land structures.

Andy Wightman: I do not have a very fixed view on that. All of that needs to be debated. Your question is: how can we make sure of that? That raises a rather more fundamental question. If you-by which I take it to mean the Scottish Affairs Committee or Westminster-want to make sure of anything, you need to take the legislative steps to do it. There is a fundamental question here as to whether you believe that, as a first stage, we should remove the Crown Estate Commissioners from any legislative competence in Scotland and, therefore, hand over the powers to the Scottish Parliament. It essentially picks up many of your recommendations, considers them and further develops them into a scheme of devolution, in which case Westminster would be handing over those powers to the Scottish Parliament. There would be no guarantees as to what it might do. It does what it wants. There is nothing you can do to guarantee that. If you wanted to guarantee it, you would have to pass the legislation yourself.

In answer to your question about how you would guarantee that, you cannot. These questions need much more detailed debate. I welcome the Committee’s scrutiny of this and ideas you will be coming forward with will be very helpful in that debate, but I do not think they will be able to answer every last question that arises.

But I am quite clear that the national interest needs to be represented by the
Scottish Government, or an arm’s-length body such as a public lands trust, who would steward these resources in the national and public interest. That is a big difference from the position now where the Crown Estate Commissioners are unaccountable and are not managing in the public interest; they are managing it according to very strict criteria under the 1961 Act. You would then have a scheme of devolution to local authorities, and that scheme would involve both the administration of the rights and the extent to which that was devolved, and the sharing of the benefits.

Q454 Iain McKenzie: I want to deal with the question which was put to Mr MacLeod about community bodies and their relationship and interaction with local authorities. At what level is that? Do they share in, or are they contributors to, the local plan for that particular area?

Lorne MacLeod: Most of our members will be heavily involved in that and work very closely with local authorities. At the moment, our membership representing 500,000 acres simply covers the Comhairle nan Eilean Siar-the Western Isles Council-the Highland Council and Argyll and Bute Council, and none of the other local authorities. The working relationship with these three particular local authorities is extremely close.

Q455 Graeme Morrice: Mr Wightman, earlier you mentioned the new regime for planning and strategic management since the creation of Marine Scotland. Can you explain the key features of that new regime and the main points of departure from the previous system for the management of the marine environment in Scotland? What, if any, impact does this have on the role of the Crown Estate?

Andy Wightman: I am no expert on the marine environment or planning. In the summer the Scottish Government completed a pre-consultation, as they call it, on a draft marine plan. They have a statutory responsibility to draw up a national marine plan which would cover strategic planning on things like nature conservation, fisheries, offshore renewables, minerals and all the uses of the marine environment. The importance of that plan is that it also has responsibilities under the UK Marine Act as well for nonterritorial waters. The importance of that Act is that it gives a strategic framework within which the marine environment can be managed because there are many competing interests there, and hopefully it will begin to resolve some of those in advance of specific developments coming forward.

As to the relationship between that and the Crown Estate Commission, it really changes nothing. The Crown Estate Commissioners merely administer the property rights of the Crown Estate. Nobody can do anything in the marine environment without, first, consent from the people who administer the property rights, the Crown Estate Commissioners, and, secondly, planning consent from Marine Scotland. I suppose the change from the previous regime is that the marine environment is now going to be subject to a strategic plan, which is a big step forward.

Q456 Graeme Morrice: You both express concerns in relation to the role of the Crown Estate in the context of the development of offshore marine renewable energy. Community Land Scotland noted that the CEC’s role in this respect needed to be addressed as "top priority", while Mr Wightman noted there was much to be lost by having CEC as "power broker and deal-maker over the development of marine renewable energy". Can you explain your specific concerns in this respect, and what, if any, role CEC should play in the development of offshore renewable energy?

Andy Wightman: My concerns in relation to the role of the CEC and its dealings?

Q457 Graeme Morrice: Yes-in the development of offshore renewable energy.

Andy Wightman: In my view, the process of developing offshore renewables is somewhat hindered by the fact that, on the one hand, you have a statutory planning framework governed by the Scottish Parliament, Marine Scotland, the marine strategic plan and so on, and then you have all this Scottish public land administered by the Crown Estate Commissioners. Their interests may not coincide with the interests of either the Scottish Government or the marine plan at all times. We have already seen this where consents, or at least pre-consents, have been entered into for areas of sea bed for which subsequently Marine Scotland have refused planning consent. In most other European countries developers simply go to one agency in the Government and sort things out, whereas here they need to go to two. It would lead to greater efficiency if the Crown Estate Commissioners were removed from the picture.

Q458 Graeme Morrice: Mr MacLeod, do you have anything to add to that?

Lorne MacLeod: The remit of the Crown Estate Commission is to look on a commercial basis at all of the developments. The bit that is missing is looking at the economic and social development of many of these communities. The communities that our body represents are among the most fragile, remote and peripheral in the whole of the United Kingdom. We are talking here about trying to create jobs and develop businesses. To me, it is rather strange that our community landowners own all the land and are able to facilitate developments on it, but immediately you go into the sea environment they have no remit whatsoever. We do not have all the tools in the toolbox, and that is where I see great advantages.

To return to points raised earlier by Andy, I am surprised he has not been more radical. He mentioned he was not so keen on the communities themselves having some of these powers. A role that could be had by Marine Scotland is to oversee, regulate and look at compliance to make sure that, if any powers were given to a community land body, Marine Scotland could be the compliance regulatory body to make sure there was openness and transparency and it was following the general strategy to promote development in the marine environments, similar to the way at the moment many of the bodies are subject to the Office of the Scottish Charity Regulator and others. That role might give greater confidence to your Committee in granting powers at local level.

Q459 Chair: There are two issues, are there not? As to the question of planning powers and so on, if Marine Scotland is given strategic planning powers, that is the equivalent of national planning powers on land, is it not? Then you come down to the tactical level, as it were, where the local authority has planning powers over detailed development. They could quite easily have the same tactical planning powers for the coastline. The issue then is the equivalent of property rights where there would not necessarily be ownership, as it were. If property rights replicated those on land, that would solve your issues. As to the reservations you are expressing, presumably, it then depends upon who controls those, how they cascade downwards and how it is handled, does it not? Taking your point about the local authority perhaps being the organisation which has the property rights, and they in turn can delegate them to community land structures, trust ports or anybody else, that encompasses both of those issues, does it not?

Andy Wightman: Yes. To be clear, on property rights I do not envisage any change in ownership; they will continue to be owned by the Crown. But the question is who administers these rights and decides whether, for example, trust ports, harbours and local authority ports should be granted the sea bed in those ports. I think they should be given the sea bed to get on with it. Edinburgh Council should be given Princes Street Gardens to get on with it, but the point is who administers those rights and makes the decisions. I certainly think that local authorities have a big role in administering those rights-absolutely. I am prepared to be extremely radical on many topics.

Chair: Go for it.

Andy Wightman: I am not in any way disputing Community Land Scotland’s position. Their suggestions are interesting and reasonable ones. I just think it needs more thought. There are other landowners who are charities. For example, would the RSPB or the Scottish Wildlife Trust qualify to be given the right to administer the sea bed off their holdings?

Lorne MacLeod: I am sorry to interrupt. I would commend those bodies that have democracy at their core. All community land bodies set up under the Land Reform Act 2003 have to have open democracy. Under our memorandum and articles we can never go below 20 members; indeed, the one I represent has 850 members. I would also advocate development trusts. There are many development trusts that are slightly different from community land-owning bodies. I think you had evidence from the likes of Tobermory Harbour Association, for instance. Anybody in the community can become a member of it and have voting rights. They have done an absolutely fantastic job in the development of Tobermory harbour, erecting buildings and developing pontoons. A body such as that truly has the capacity to take on the powers of administering the rights of the Crown Estate in that area. I would advocate that most strongly.

Andy Wightman: The problem is how you put that into effect. You cannot put that on the face of a Bill; you cannot divvy it up, because some of these organisations may disappear the day after Royal Assent.

Q460 Chair: That is absolutely right. Suppose you said that the powers lie with the local authority and the local authority recommended that. That would cover your point about the RSPB, which, as I understand, it is not a democratic body.

Andy Wightman: It is a democratic body; it has members who-

Q461 Chair: Up to a point, but they are not necessarily locally based.

Andy Wightman: No; they can be living anywhere.

Q462 Chair: It is not democracy as we know it.

Andy Wightman: It is not local democracy, no. I think local authorities should get more power, and we should have much more local government. I like the situation in places like Denmark where Danish communes raise 60% of their own finance. I want lots of power held locally. Without any disrespect to Highland Council and Argyll and Bute Council-they are doing great jobs, and all the rest of it-you might find they are rather disinclined to hand over some of these powers to community bodies. I do not know. That would be another uncertainty. It would be an act of faith.

Q463 Chair: This is a major point, and that is why we have had meetings with Michael Foxley from Highland Council and a number of others from various councils. We are hoping to have an event with them in the not-too-distant future at which we will clarify some of these points. This is a "Scrabster not trusting Inverness" point, is it not?

Andy Wightman: It is a similar reflection of that.

Q464 Chair: That is why I think we are a bit hesitant about saying we should simply pass all this over to somebody else to deal with. In our report we would want to be quite specific about what we want to see happen. If somebody does not accept that, the onus would be on them to justify why they were not doing it on that particular basis. That covers all the community land matters. To come back to your point about the RSPB, presumably, they could always have the equivalent of a subcontract which would be democratically accountable to the local authority so that, within certain parameters, they would be operating various things as decided by a democratically elected body. They would be the hands-on people on the ground, but the local authority would always have the power to step in, unlike, say, the powers they gave to the community land groupings. They would be much more hands-on and able to manage things. Does that seem to be a possible structure?

Andy Wightman: Absolutely. Local authorities are key to this, but it is also important to recognise that there are different levels of control. You have the question of title and ownership. As I say, I think the land stays with the Crown, unless some of it is alienated. If you gave harbour trusts the land in their harbours, you would be alienating Crown land, but it would remain owned by the Crown. You then have the question of who administers the rights, signs the deeds and says, "Scrabster Harbour can have this" and so on. In my view, that should be the local authority. Then you have the question of planning, which I have already covered.

But you raise the question of the RSPB. I just raised them off the top of my head. But you do have the question of management. The role of organisations like the RSPB and even private landowners may be to manage some of this estate-not to administer the rights. They would not be capable of leasing or alienating it but managing it. In theory, that would be a role that anybody could come along and offer to do.

Q465 Chair: Subject to the democratic accountability of the local authority.

Andy Wightman: Absolutely. You could put together a quite radical scheme that would certainly assist in other debates that are hardly even happening just now, for example, over the management of Forestry Commission land, which again is a highly centralised operation and has no local input whatsoever. Therefore, if you came up with a scheme that was quite decentralising and empowering, that would be very useful as a model for how other public lands are administered.

Chair: That is for somebody else next week. Perhaps we may turn now to questions about control of the sea bed, some of which we have already touched on.

Q466 Lindsay Roy: Are you aware whether the Crown Estate have a strategic plan about the development of the sea bed and the leases?

Andy Wightman: I do not know; I am not privy to their internal affairs, but we know they have been bringing forward areas of the sea bed in rounds.

Q467 Lindsay Roy: Does it seem ad hoc or strategic?

Andy Wightman: It seems ad hoc to me, but maybe it is not; maybe it is strategic. I have never seen a strategic plan.

Q468 Lindsay Roy: Should we not know that?

Andy Wightman: Ask the Crown Estate Commissioners.

Lindsay Roy: We will do that.

Q469 Chair: The public collectively should know that.

Andy Wightman: Yes.

Chair: I think his question was rhetorical.

Q470 Lindsay Roy: We will find out next week because we are meeting the Crown Estate Commissioners.

Lorne MacLeod: Further to that, there is also the need for greater openness and transparency. Part of the feedback from one of our members in particular was the fact that they did not know about a development on their coast until a developer contacted them to access the land to get to the sea.

Q471 Lindsay Roy: Was it a fish farm?

Lorne MacLeod: It was not; it was a renewable energy proposal. But then they presented our member with a fait accompli-"Give us access across the land to get to the sea." They were certainly not invited to the table to talk about their participation in the development.

Q472 Lindsay Roy: So they felt completely disenfranchised.

Lorne MacLeod: Indeed.

Q473 Lindsay Roy: What arrangements should replace the Crown Estate Commissioners’ monopoly of the sea bed and the current issue of sea bed leases? Should it be Marine Scotland?

Andy Wightman: This is a national public estate. At the end of the day, what we are talking about, essentially, is who is administering the rights. Is it an unaccountable body like the Crown Estate Commissioners or a more accountable set of arrangements within a national strategic planning framework by Marine Scotland with a devolved structure, whereby local authorities have a certain amount of control and so on? I think that would be an improvement, but basically the situation would be the same. There would be an authority of some sort that would lease the sea bed, draw up the leases and grant them, but it would be done in a more transparent and democratic way; and it would also be done in a way that made more strategic sense. You would not have a body talking to developers and pre-leasing rounds in areas of land in respect of which two years down the line Marine Scotland decided, "No, sorry; you can’t develop there."

Q474 Lindsay Roy: If it were Marine Scotland, concerns have been raised with us about the responsibility for a revenue-generating role in issuing leases as well as a regulatory role in marine planning. Is that a concern you would share?

Andy Wightman: Yes. As I said earlier, you have the question of ownership, administration of the rights, the planning and how the revenues are handled. How the revenues are handled is much more flexible. At the moment, they are governed by the 1961 Act, but, if that were to be stripped away, you could devise a scheme where you had a system of revenue sharing among local communities, local trusts, local authorities and national Government. The national Government should get a substantial slice of this. It is national Government that pay all the costs of regulating and planning this environment, and they are getting none of the financial benefits from the leases. That is completely flexible, and I would like that to be much more transparent. It would be important that a substantial amount of the revenue arising from all types of the Crown Estate was used for investment. This is not simply a tap you turn on and lots of cash comes out which people can go and spend; it would be important to invest it. It was very helpful to see in the evidence of the Crown Estate Commissioners to your Committee their capital investments over the last 10 years since devolution. There has been a net outflow of capital from Scotland of £10.6 million. I would want to see a position where we were investing a lot of the revenues from the Crown Estate into long-term investment in infrastructure, harbours, communities and so on.

Lorne MacLeod: That has to be a "must". Effectively, the Crown Estate are taking considerable revenues out of some of the most marginalised communities in the whole of the United Kingdom and some of the most depressed in many ways. Because they are so peripheral-in particular our members are mostly island and coastal communities-they have to have the opportunity for economic development and to get some of these additional revenues to plough back into business.

I would also argue that many community land-owning bodies have the capacity to negotiate leases, and do it on a day-to-day basis. This is in effect big society in action, and has been for many a year among these community landowners. They are essentially running businesses, generating profits and are involved in renewable energy developments on the land at the moment. It is just that we do not have a seat at the table in terms of those renewable energy developments in the sea area.

Q475 Lindsay Roy: It is interesting that you draw that parallel, because there is another parallel with the localism agenda south of the border.

Lorne MacLeod: Yes.

Q476 Lindsay Roy: How could coastal communities be given a direct input into what sea bed leases might or might not be granted in adjoining coastal waters? How far out to sea would coastal communities’ legitimate interests lie, if we think of the Tiree Array, on which I have a follow-up question?

Lorne MacLeod: We advocate that community land-owning bodies that have the capacity and the wish to be involved should be involved in these sea bed leases. I gave the example earlier of Glenelg, which is very close to their shore. We are talking about immediately on their doorstep. This would be a lost opportunity for them if they were not able to be involved in the tidal energy proposal. Our members have varying discussions about how far out the powers should go. We talked about the Tiree Array. It is such a massive development that there is probably no capacity to take on something of that magnitude, but certainly other developments, particularly tidal or wave energy projects, are closer to shore. There may be other developments that are not far offshore. I cannot give you an exact distance. The standard at the moment is 12 nautical miles, but many of our communities are looking more at the immediately adjacent land. As I have illustrated before, many of our communities are involved in very large land renewable energy developments. Our own one, Sealladh na Beinne Moire, is a £10 million 6.9 MW development. That is pretty major. There could be similar offshore developments in which Sealladh na Beinne Moire would want to get involved.

Andy Wightman: Again, it comes down to exactly what it is one is talking about in terms of their involvement. I think coastal communities should be totally involved in the planning regime as to whether consent should be granted for whatever developments-minerals, offshore fish farms, pontoons, harbours-just as they are on land.

Q477 Lindsay Roy: Any distance?

Andy Wightman: I think you had some evidence about how far you can see if you stand on the shoreline.

Q478 Chair: What worries us about that is that Iain McKenzie-

Andy Wightman: He’s a tall chap.

Chair: That’s right. He will see a wider area than I can. He would be able to see at least a couple of miles further than me.

Andy Wightman: The territorial waters are the obvious limit, I think. In planning they should have a big role, but in terms of the actual leasing probably no role at all. At the end of the day, it is a technical matter of drawing up a lease with a developer for a plan that has already been approved. If the national strategic plan and local authority think that certain areas would be good for mineral extraction, offshore renewables or whatever, it simply comes down to a bidding round as to who is going to develop it. I am not sure the community really needs to have a great deal of say as to which developer develops it. A third point is the revenue sharing. Again, I think they should have a strong role in that.

Q479 Lindsay Roy: It will not be a surprise to you that there was a group of people in Tiree who felt that 100% of the revenue should go to Tiree.

Andy Wightman: And also Islay I think?.

Chair: No. The people we saw in Tiree felt it should all go to Tiree.

Q480 Lindsay Roy: Others felt there should be a proportionate element, for example, to arrange an interconnector. Indeed, an interconnector might be not to Scotland but south of the border. Do you have any views on how that might take place?

Andy Wightman: That relates back to my point about investment. A lot is talked about offshore renewables. The actual projected direct revenues to the Crown Estate Commissioners for 2020, even at top level, are only £49 million, which is not a great deal of money. The really big numbers being talked about are all projections into the next 20 to 30 years. They are highly speculative because they are dependent on issues like interconnectors, or whether the technology will be developed in time to build these things and all the rest of it. That highlights the fact that offshore renewables in particular require an awful lot of investment, not just in the plant itself but the infrastructure. A lot of the revenue from the Crown Estate will have to be invested and, therefore, will not be available for people in Tiree or anywhere else. If this money is not invested in developing that industry and coastal communities, it will be a lost opportunity.

Q481 Lindsay Roy: But it would be right and proper if some of the funding went back to the community.

Andy Wightman: Absolutely.

Q482 Lindsay Roy: And how you work out the percentage are variable factors.

Andy Wightman: Yes; it is a complex picture.

Lorne MacLeod: That would be an excellent use of moneys particularly from the Tiree Array. The Outer Hebrides in particular suffer from not having an interconnector, which means that many communities cannot access the grid at the moment. The same goes for the Inner Hebridean communities where grid capacity is full. Indeed, taking our own development in the South Uist area, once we are on grid, the capacity will be absolutely full. An interconnector would be a particularly good use of money, because we have a wind resource that is among the best in the whole of Europe. It just seems a shame that we are hampered because of the lack of an interconnector.

Q483 Lindsay Roy: Are community bodies such as community councils and trusts suitable organisations to administer the revenues from the sea bed locally?

Lorne MacLeod: Asking myself that question, we believe that community land boards are properly constituted, have the capacity and are willing to take that forward. A similar position would apply to development trusts and harbour trusts that have the capacity. There should be a system under which these bodies can apply to get those powers on a local basis.

Q484 Lindsay Roy: And, where there is not, there should be liaison or negotiation with the local authority.

Lorne MacLeod: Indeed.

Andy Wightman: Your question was whether community councils would have the capacity to administer the funds. I do not think they should administer the funds because some of them will want to be beneficiaries of them. The administration of those funds needs to be in an arm’s-length local trust-type body which can be seen to be independent and impartial.

Q485 Lindsay Roy: Since we last met, the Government decided that a coastal communities fund was the most appropriate means for distributing the funds. What are your views on that?

Lorne MacLeod: It is a welcome start, and certainly 50% of the revenues from the Crown Estate are to be put back into the communities from 1 April onwards. That fund will increase as time goes on and there are more marine renewables involved. We would welcome that as a good start, and, hopefully, the 50% can gradually increase to a higher level as time goes by.

Q486 Lindsay Roy: Would it be administered through the Big Lottery Fund?

Lorne MacLeod: We are not so keen on administration through the Big Lottery itself because the experience of many of our members is that it is overly fixated on process.

Q487 Lindsay Roy: It is bureaucratic.

Lorne MacLeod: For instance, the Growing Community Assets Fund presently administered by the Big Lottery is telling applicants at the moment that it will be a minimum of six months before an application would be approved. Further to that, they have had 63 applications so far, of which, as I understand it, only one has been approved in the second round of the Growing Community Assets Fund. I do not feel that is a particularly good report card, but the funds themselves are greatly welcomed. We would question the Big Lottery handling those funds.

Andy Wightman: It is clearly a political move. It is not hypothecating 50% of the Crown Estate revenues from the marine environment; it is handing over an equivalent sum to that, so that could be varied. It could simply be withdrawn at any time. It is not embodied in statute; it is mainly a Treasury initiative which could disappear at any time. I do not think you will find anyone who does not welcome money coming back to the communities from which it has been derived, but there are serious questions about its long-term structure and accountability.

I would point out that there are a substantial number of community benefit funds around Scotland, England and Wales deriving funds from onshore wind farms. We are now at a stage when a lot of lessons have been learned as to how these funds are handled. Some of them are not doing it terribly well; others are doing it rather better, and lessons can be learned there. I think lessons are being learned about how best to administer it. I was talking to people in South Ayrshire, who have a community benefit fund of over £500,000 a year. It is not that experience is lacking, but we could learn something from how they have been handled.

Q488 Lindsay Roy: Do you feel it has been a knee-jerk reaction?

Andy Wightman: What?

Q489 Lindsay Roy: The Coastal Communities Fund.

Andy Wightman: Absolutely.

Q490 Lindsay Roy: And not well thought through.

Andy Wightman: I do not know that it has not been well thought through, because all we have at the moment is a press release; we have no details. "Knee-jerk" is rather pejorative. It is a response to the fact that the SNP won the election on 5 May and raised the profile of the Crown Estate by making it one of the things they wanted adding to the Scotland Act. It is politics, fair enough. Had someone else won the elections in May, I do not think the coalition Government would be coming forward with a community benefit fund, frankly.

Q491 Lindsay Roy: But this inquiry started long before the SNP won the election, so we would be pursuing this with the same robustness.

Andy Wightman: Yes.

Q492 Chair: You are a deeply cynical man. Fancy taking that view. I come back to control of the sea bed just to be clear about a couple of things. One of the points raised with us is whether or not it is appropriate for Marine Scotland to be the equivalent of the planning authority and to have a role in issuing the leases. Our view coming forward is that we can see a role for Marine Scotland in terms of strategic planning and the like, but the issuing of leases by, say, local authorities would overcome the clash of interests in the one organisation. I want to be clear about this, because we shall be taking it to other people as well. Is that a formulation with which you are happy?

Lorne MacLeod: I would agree with that format. Where Marine Scotland or some other body might have a role is in terms of regulating or overseeing how a community land body operated, but not the actual delivery of the licences.

Q493 Chair: I understand that, but it is a slightly different point.

Lorne MacLeod: Indeed.

Q494 Chair: The supervision of community land structures is perhaps for someone else; it has to be decided. I cannot see that Marine Scotland necessarily has a remit in that at all.

Andy Wightman: I can offer a view here. It is a classic potential conflict of a body which is both regulating and planning and also receiving the benefits. Of course, local authorities already have that conflict; they own a lot of land over which they are also the planning authority. There are other public bodies like the Forestry Commission that administer a lot of land and have potential conflicts. My emerging view is that all the rights that form the Crown Estate should be administered and held by some form of independent public lands trust. Therefore, while Marine Scotland would be regulating and offering planning and all the rest of it, it would not be responsible for granting the leases; that would be separated off into another body.

Q495 Chair: The difficulty, surely, about having some sort of quango doing it, which presumably is appointed by somebody somewhere, is that they could be cutting across a democratically elected local authority.

Andy Wightman: Yes. I was going to say that, alternatively, you could simply hand over the whole question of granting leases to local authorities. That would also be a perfectly reasonable way forward, but there is a potential conflict. In many other European countries essentially the Government own the sea bed, decide what happens there, grant leases, receive income and decide who goes where. It is a vast public estate, and there are not the same kinds of conflicts, if you like, that might exist on land where people live and there are other land uses, and all the rest of it. I am not sure that the conflict can be characterised in exactly the same way as other similar conflicts.

Lorne MacLeod: Where I would disagree with Andy is that I would not like to see another level of bureaucracy brought in by some other body. I would rather those powers went to the local authorities themselves and to community development bodies where they had the capacity to take them on. It is just another level of democracy which means it is even more difficult to get down to local level and empower local people.

Q496 Chair: I just want to be clearer on the second point. Lindsay has already picked up some of these points. Have you given any thought to the sort of division of resource that might take place? We have discussed the Tiree Array, which is of enormous scale. We have been discussing in the abstract with other organisations how, if you have one wind farm or one turbine, 100% of that might go to the local community. If it goes above a certain level, a percentage might go to the local community but the rest goes to the local authority. Have you thought about what those steps might be?

Lorne MacLeod: We have certainly thought about the principles, and it reflects just what you have said. But, with regard to the actual thresholds and setting the parameters, we have not got to that stage in the debate. At the moment, we are having that internal-type of discussion with our members, and we are happy to produce a follow-up paper that perhaps would flesh it out in more detail.

Q497 Chair: That would be helpful. We are getting pretty close to having a meeting where we draw up our heads of report and so on. Clearly, that will be some part of it. We have the choice of either putting something out there that provides the basis for discussion or we just leave it in the abstract. I fear that, if we leave it in the abstract, it will be centralised. Of course, it has to pick up Lindsay’s point about the need for an interconnector. People raised with us the possibility of interconnectors coming down from Iceland with bits coming in and all the rest of it. It was a major strategic proposal which would be beyond Scotland in a sense; it would be a UK-wide remit. We can see several different levels at which that should happen, and guidance from you would be helpful.

Andy Wightman: I think the principle is sound. The problem is that, at the end of the day, you will have to draw lines on maps. You will have to decide where communities stop. There are no community boundaries; they do not exist, because we have no real local government. The only statutory boundaries we have are local authority boundaries.

Q498 Chair: This takes us back to your attempt to reorganise local government. I do not think we are going to do that today.

Andy Wightman: No, but, if you do want a scheme like that, you will have to draw lines on maps that are based on community council areas or, in the case of community landowners, they have to have a boundary that extends out to the sea. We all know the problems of extending boundaries out to sea and the controversy there has been on the Scottish-English boundary on the east coast north of Berwick. At what angle do you head off? These are not insurmountable, but, if you are to have that kind of plan, you have to do that level of work.

Q499 Chair: Surely, you can have a general structural approach and then fill in some of the details. The community land structures are of different sizes; the local authorities are of different sizes.

Andy Wightman: Yes, but, if there is a turbine of a certain size and all the benefits go to the community, the question is: which community? If the turbine is half-way between Eigg and Skye, does it go to Skye or Eigg? What about the mainland? Some of the detail is quite tricky.

Q500 Chair: I underestimated your capacity to cause a row in an empty house, and find a difficulty where I had not previously seen one.

Andy Wightman: I am just suggesting that you will probably not be able to get down to that level of detail, but at some stage we have to.

Q501 Chair: We need guidance from somebody on something related to that; otherwise, we just leave a blank page.

Andy Wightman: I want to come back to your point about the conflict of interest between national and local and all the rest of it. If all the administration of Crown rights was handled by local authorities, there would be tension. You might find that a local authority simply decides to alienate all the sea bed to a multinational private company.

Q502 Chair: But it is then accountable.

Andy Wightman: It is accountable, but the point is that this is still a national estate.

Q503 Chair: Edinburgh Council could presumably sell off Princes Street Gardens.

Andy Wightman: If they own it. Do you mean on the Crown Estate?

Q504 Chair: Yes; it is a parallel.

Andy Wightman: Yes. I advocate we should simply hand over the title. It should no longer be Crown land and it simply becomes part of the common good of the city of Edinburgh. But the sea bed is all owned by the Crown. If you are to give local authorities exclusive rights to administer the sea bed and decide who does and does not get leases, and give them power to administer the property rights, they could in theory sell the whole lot. There is a national interest in that. I am not talking about another quango but some kind of body that would be set up by statute to look after the public interest in this national estate.

Q505 Chair: Presumably, the public interest could be retained by the Scottish Government under some phraseology.

Andy Wightman: Exactly. It may be at the level that no local authority would be allowed to alienate or sell the sea bed without the consent of Scottish Ministers, for example. They can quite happily enter into leases that should not be longer than a certain period.

Q506 Chair: When we spoke to harbours there were circumstances in which small pockets had been alienated.

Andy Wightman: Yes; and they should alienate it. All the trust ports and harbours should get complete control over their sea bed, so there would be circumstances in which it would be perfectly permissible for local authorities to do that.

Q507 Mr Reid: Lindsay asked about the lottery distributing the Coastal Communities Fund. Both of you felt that it was not an appropriate body. Do you have any suggestions about what the appropriate body should be?

Lorne MacLeod: In the past, funds like the Scottish Land Fund were administered by Highlands and Islands Enterprise, and Scottish Enterprise in the lowland areas. I think that set-up worked particularly well. Even though the Big Lottery were maybe the bankers for that fund, they set up a separate committee drawn from experts in the field. They administered it and were extremely successful. Some of the processes involved can be quite laborious in terms of applying for Big Lottery money, but we welcome the funds.

Andy Wightman: I do not have a view on the Big Lottery administering this fund. It is not something over which I have lost any sleep. The Scottish Land Fund was a committee of the Big Lottery, and I sat on it. While Highlands and Islands were the managers and the people who took in the applications, considered them and drafted reports, it was the Scottish Land Fund committee that took the decisions. That committee was appointed by the Big Lottery. It was a full-blown lottery scheme, although it was not a Big Lottery board itself; it was a subcommittee, the Scottish Land Fund.

For what it is worth, I am not sure the Big Lottery is an appropriate distributor for these funds. It needs to be a much more local public trust and common good-type arrangement that is much more accountable to local sensibilities. The Highland Council, for example, used to administer the Highland Fund. Local authorities administer a lot of bequests and charitable funds and, indeed, administer common good funds, so for the life of me I cannot see why a local authority shouldn’t administer this fund. It seems daft. What does the Big Lottery have to do with it?

Q508 Chair: I think they are referred to as the great and the good, and that was before I realised you were on it.

Andy Wightman: I was on the Scottish Land Fund, which was wound up in 2006. I have absolutely nothing to do with the lottery any more.

Lorne MacLeod: They were the good guys.

Chair: The good subsidiaries.

Q509 Mr Reid: Turning to the foreshore, we have been talking about the sea bed. I suspect you have also answered a lot of questions about the foreshore. So we are clear, if the Crown Estate lost their property and other rights to the foreshore, who do you think should be responsible for taking over those property rights?

Lorne MacLeod: Again, I would commend there community land bodies. There are important powers. I can understand why we have concentrated on marine renewables, but there are other things. Many community land groups have historical foreshore rights themselves, but those that do not are not even permitted to allow a TV or film crew to film on the foreshore without the blessing of the Crown Estate. That is a nonsense. These are powers that could easily be transferred to a local body.

We are also talking about local powers to dredge and to allow pontoons to be developed and coastal erosion work to be done, which is so important to keep the land intact. That should be delegated to local level. There is also the development of shellfish farming and fish farming. If you are a crofter, it is a fantastic opportunity to be able to lay mussel beds or scallop fishing near to the coast. These are things in which the local community should be involved as of right in delegating that power. Those are the important things that need to be looked at.

Andy Wightman: The foreshore differs from the sea bed because the foreshore is subject to quite active management and development, and also half of it has already been alienated; it is no longer Crown land. A lot of it was stolen by landowners in the 19th century. There were big debates in this place, or the other place, as you call it, with the Duke of Argyll and others arguing that the Crown should have no role. There were big fisticuffs there, and there were a lot of presumptions about who owned it. The presumption of Crown rights to the foreshore is a rather ambiguous one in Scots property law. But, leaving that to one side, the question is that half the foreshore is still Crown foreshore. I am quite clear that those foreshore rights should be left with the Crown, although you could simply transfer them by a general vesting declaration to local authorities. I would not have a problem passing the ownership of the foreshore currently owned by the Crown into the hands of local authorities. Even if you did not do that, I think local authorities should administer the foreshore and should have clear powers to alienate the foreshore particularly to harbour trusts, ports and people, for example.

Q510 Mr Reid: Do you not feel there is a danger that any profits would just disappear into the local authority pot?

Andy Wightman: Profits from?

Q511 Mr Reid: Profits from renting to, say, fish farms.

Andy Wightman: That would depend on the structures you set up for dealing with the revenues, assuming you have a structure for dealing with the revenues, which I think you need.

Q512 Mr Reid: Rather than just handing over all the rights to the local authority and say, "It’s yours."

Andy Wightman: Remember, there is a difference between handing over the rights-you are suggesting that one transfers ownership-and the question of the administration of those rights. If local authorities are simply administering Crown rights, they have to go into a separate pot because, technically, they still belong to the Crown, but all of that would be subject to your revenue plans and what you were doing. You could say that all profits and income, capital and revenue from the foreshore should go into local authority funds. Offshore renewables would be different; you could do it according to the scale, and many of them would go into a national pot.

Q513 Chair: We have had a lot of discussion with others. Today, we have not spent nearly as much time on the foreshore, on the basis that it is much easier in a sense. The view we have tended to take is that that goes to the community land people or to the local authority, and that is it. You are raising an important point about the question of ownership as distinct from control, in respect of which we have not yet come down on one side or the other, but the foreshore is much easier to deal with, is it not?

Andy Wightman: Yes. If community landowners want to take ownership of the foreshore, they should probably pay for it because, after all, private landowners would have to pay for it. This is public land.

Q514 Mr Reid: How valuable is it? I have no idea of the value of the foreshore.

Andy Wightman: It is very difficult. In the absence of any detailed proposals for its use, arguably it is worth nothing. In the paper given to you by the Crown Estate Commission their capital valuations indicated as much. I cannot quite remember the value they attribute to the foreshore.

Q515 Chair: It depends on whether you are buying or selling in those circumstances, does it not?

Andy Wightman: Yes.

Q516 Chair: We welcome the commercial for your book, which I have read. Therefore, I was aware of the bits about the House of Lords and the iniquities of 19th-century landowners, dukes and so on. If you remember, on the previous occasion you were here I could not find your book south of Berwick. There was not a copy available in London to be had for love nor money, although I think that is now resolved.

Andy Wightman: Excellent.

Q517 Chair: The paperback is out, but we are still waiting for the film.

Andy Wightman: I’ll give you a starring role.

Chair: Indeed.

Q518 Iain McKenzie: Looking at the rural estate, the Crown Estate Commissioners are responsible for the management of five rural properties in Scotland-the four estates and the King’s Park. How might the future of these estates be managed if the Crown Estate Commissioners were no longer operating in Scotland?

Lorne MacLeod: There is an opportunity there for a scheme similar to the National Forest Land Scheme where communities could come forward to the Forestry Commission and say they wanted to purchase an area of forest to which they would be able to add value in terms of economic development or, alternatively, lease that land. If we are talking about Glenlivet, Fochabers, Whitehills-wherever-there are opportunities for communities locally to take ownership of part of the land, like similar community land bodies elsewhere. I do not know these areas well, but, from the reports of the Crown Estate, some of the tenant farmers there might wish to exercise an option to purchase the farmland which they have been tenanting for many generations. Those are two ways forward. As for the urban estate itself, I am sure that could be disposed of on a commercial basis.

Andy Wightman: From the Crown Estate Commission’s evidence to you, there are in the region of 214 agricultural tenancies of which about a quarter have already registered an interest to acquire their tenant farm under the Agricultural Holdings Act 2003. If the Crown Estate Commission no longer had a role in administering these rights, they would automatically fall, in the absence of any other proposal, to the Scottish Government and the Scottish agriculture department, or whatever it is called today, which already administers a number of agricultural estates. I would like to see the Scottish Government decide that those tenants who wished to buy their farms could do so without having to sell it, because the right to buy for tenant farmers is triggered only if and when the landowner chooses to sell. If it is retained in Crown ownership, it is not sold and tenants do not have the right to buy. I would like to give them the opportunity to buy their farms. For the remaining 75%, that would be a very useful reserve of farmland to administer, specifically with the intention of encouraging young entrants to farming, for example. There is now a huge problem in getting young people into farming; there is just not the land available. I think this land should be retained in public ownership and should be used creatively to allow new agricultural tenants. You could also parcel up much of it, hand it over and sell it to community organisations, if they wished.

King’s Park is a particular example; there has been a lot of controversy over it. That was one of the reasons I got very angry about the Crown Estate Commissioners. Historically, they just treated that as part of their rural estate, yet it is Scotland’s most ancient royal park, going back to the days of Alexander II. It is an incredibly historic area which they just regard as a piece of farmland and lease to a golf course. In 2001 they were going to sell the land to the golf course, and even the local authority did not know about that. This is an ancient royal park of incredible historic importance. I think King’s Park should be handed over to Historic Scotland. Historic Scotland took ownership over part of it when Edinburgh castle, Stirling castle and all the rest of it were handed over to Scottish Ministers in 1999.

Q519 Iain McKenzie: As we go forward would that be one of the key issues that needs to be addressed in the management of rural estates in Scotland?

Andy Wightman: One has to take a view of what is going to happen to those rural estates. I was drawing the distinction between Fochabers, Glenlivet, Whitehills and so on, as genuinely rural estates, and places like the King’s Park, which they have called a rural estate but is an ancient possession which they have managed incredibly badly in my view, even to the point of secretly agreeing to sell it to a private organisation. As to the urban property, just get rid of it. There is virtually none left; there is a property in George Street and a share of a development at Fort Kinnaird, which is not technically owned by the Crown Estate Commissioners but is held by some investment vehicle. You can just forget about that.

Q520 Chair: From your perspective, as to the urban estate I can see the advantage. If the UK Government want to have a property development company that operates across the UK as a whole, with a shopping centre in Scotland, I do not think there is anything particularly Scottish about that.

Andy Wightman: No. I think 75% to 80% of the business is already urban commercial property. I would have no objection. If the Crown Estate Commissioners were to be removed from any role in administering and managing the Crown Estate in Scotland, I would have no objection to the Crown Estate Commissioners residual buying property in Edinburgh if they wanted to, like any commercial developer. I would not stop them; they would be free to operate in the market if they wished.

Q521 Chair: There are issues about what is achievable. There is a stronger political case for looking at the foreshore, sea bed, mussels and so on than there is about Fort Kinnaird and these sorts of things.

Andy Wightman: The point is that over the last 10 years they have got out. They used to have a more substantial urban estate; now they have virtually nothing left, so it is really a nonissue.

Q522 Chair: Are there any answers you had prepared for questions that we have not asked you? Is there anything you want to get off your chest that you feel we have not touched on?

Lorne MacLeod: I think you have been particularly thorough. I have nothing left on my list.

Q523 Chair: People say that flattery does not work. That has never been my experience.

Andy Wightman: There is one thing. Section 1(5) of the Crown Estate Act 1961 is a disgrace. That section says that no one shall be concerned to inquire as to their business, etc. I do not think you have ever looked at that.

Q524 Chair: I do not think that was in your book.

Andy Wightman: It is.

Q525 Chair: Offhand, I cannot remember looking at that. We were looking at the Crown Estate from the point of view of the land and what we wanted to achieve, rather than looking at the Crown Estate as an organisation in the way that, say, the National Audit Office or Committee of Public Accounts might look at it. We were looking at it from a different angle. There are so many other institutional and vested interests relating to the Crown that we were being self-limiting.

Andy Wightman: This section is in a sense fundamental to the debate because it purports to prevent anyone questioning what they are doing, which is part of this.

Q526 Lindsay Roy: Locally it is none of your business.

Andy Wightman: That is what the section suggests.

Chair: But there is more than one way of skinning a cat. Therefore, we have got all this information.

Q527 Lindsay Roy: That is very helpful because we do need evidence.

Andy Wightman: I have nothing to add, other than that what has been useful in your work is the fact that you have flushed out a lot of information that has not been in the public domain until now.

Q528 Chair: Is there any major omission in terms of the information we have been asking for? Do you think it is all very well asking for A, B and C, but we really should have asked for D, E and F?

Andy Wightman: I do not think so. I was quite impressed by the information that the Crown Estate Commissioners supplied to you in response to earlier questions put to them by the Committee, and various annexes. I am not sure they physically handed them over to you; they said they were available.

Q529 Chair: I understand we have the annexes.

Andy Wightman: There are some maps of gold and silver. These things should have been in the public domain and on their website years ago and have never been. That is extremely valuable.

Q530 Chair: I understand that these maps are not now publicly available through our website; they crashed the system.

Andy Wightman: Were they supplied in paper or in digital form?

Q531 Chair: In digital form.

Andy Wightman: Therefore, their potential availability could be flagged up.

Chair: Presumably, it was not their intention or ours to crash the system, so in theory we will put them on the system.

Lindsay Roy: Gold-plated.

Chair: That will happen. In drawing this to a close, if there is anything you suddenly remember as you are walking down the street and wish you had been asked, or had said such and such, or there are further pieces of information that it would have been helpful if we had asked for it, let us know. If it does not crash the system, we will ask for it and try to put it on. Thank you very much for coming along. I hope you have found his helpful.

Examination of Witnesses

Witnesses: Gareth Williams, Head of Policy, Scottish Council for Development and Industry, and Andrew Jamieson, Policy and Innovation Director at ScottishPower Renewables, gave evidence.

Q532 Chair: I welcome you to the second session this afternoon of the Scottish Affairs Committee. You were both here during the earlier session, so you will have an idea of the sort of issues we are pursuing. Perhaps you would start by telling us about SCDI, how it is constituted and what the point of it is. Is ScottishPower one of your members, and what is its relationship to the Crown Estate? Just give us the background.

Gareth Williams: We are an economic development membership network. We have a broad range of members from the private sector, but I suppose the unique aspect is that we also have local authorities and other public bodies and trade unions as members. That gives us a bit of a unique perspective. We have offices round the country, including a highlands and islands office, and these issues have been of interest to the Committee in that area for a number of years. In terms of members, ScottishPower are a member of ours, along with many leading players in the aquaculture sector, ports industry and equally local authorities. We have to balance their perspectives in terms of our contribution to the debate. The Crown Estate are also a member of SCDI. We have done work with them in bringing them together with those constituencies’ of interests. We have discussed these points on a number of occasions over the last year.

Q533 Chair: Turning to Mr Jamieson, could you just clarify who you are, what your company is, what it is part of, who runs it and where decisions are made?

Andrew Jamieson: I am Andrew Jamieson, the policy and innovation director for ScottishPower Renewables, which is headquartered in Glasgow. We have 15 operational wind farms in Scotland and a further five or six throughout the United Kingdom. We have over 200 members of staff. We are the largest developer of onshore wind in the UK, and we were the first in the UK to reach 1,000 MW of capacity.

In addition to our onshore wind portfolio, we are also developing wave and tidal energy devices as well as offshore wind around Scotland. Ultimately, we are owned by Iberdrola, a Spanish company based in Madrid, but the offshore part of the business is managed entirely from Glasgow. We look at Iberdrola’s offshore business globally, which includes projects in Scotland, England and throughout Europe.

Q534 Chair: The criticism of the Crown Estate has been its centre in London, but presumably you are centred in Madrid. How do you manage to have linkages with Scotland, and how do you avoid being remote?

Andrew Jamieson: Our UK operations are very autonomous from Spain. Clearly, they have a lot of management control over things like budgets and so on, but the interfacing and operational part of management is done from Glasgow or offices in London. We enjoy very strong and fruitful relationships with the Crown Estate in the projects we are exploring with them as landowners for those projects.

Q535 Chair: As to the management of marine renewables elsewhere in Europe, since you are part of a Spanish firm, does Iberdrola have operations equivalent to ScottishPower elsewhere in Europe developing marine renewables? If so, how are the differences expressed?

Andrew Jamieson: It has similar operations for wind power throughout Europe and North America. As to marine stuff, in terms of offshore wind, for clarity, "marine" to me always means wave and tidal. Forgive me if I confuse the terminology here from time to time.

Q536 Chair: When I say "marine" I think of water.

Andrew Jamieson: Yes, I understand. All of the offshore developments are run from Glasgow for Iberdrola.

Q537 Chair: Is that throughout Europe?

Andrew Jamieson: Yes. There are some services that come from our Spanish colleagues, particularly in technical engineering services, but it all comes back through the Scottish HQ. Our Spanish colleagues have invested in R and D in very small experimental wave devices before, so there has been no drive to do anything in the wet environment beyond what we are now controlling from Glasgow.

Q538 Chair: So you as a company have no experience of any other jurisdictions.

Andrew Jamieson: We have projects under development in Germany, and potentially in France. In the Baltic sea we have active projects that are being pursued, and there are some off the coastline of Spain.

Q539 Chair: You have heard a lot of the discussion. No doubt you will have been briefed before you came about the nature of the debates we have been having about local participation. Are there any lessons you would draw to our attention about what has been happening elsewhere that might be of value to us?

Andrew Jamieson: To be honest, not elsewhere. I think the UK is looked at as a model for other countries in particular in terms of, when we are going to develop an offshore wind sector, what the best way is to do it. In terms of what the Crown Estate have done for offshore wind, they ran the licensing for what were called rounds 1 and 2 projects, which were mainly, if not exclusively, south of the border. They acted purely as landowner in those projects, so they granted licences to go off and develop projects, and then it was up to you to take it through the planning system. For round 3, which is the next big phase of projects due to come in and is far bigger capacity, they are taking a far more active role in helping developers develop their projects, because they have seen developers run into barriers and issues. They can help to unblock many of those issues. They are investing capital in projects with us and the rest of the industry in round 3, and they are opening doors in terms of speaking to other Government Departments where there are common issues on which we can all work towards common solutions.

Q540 Chair: As to international comparisons, is there an equivalent in, say, Germany and Spain in terms of ownership of the sea bed?

Andrew Jamieson: There must be, but I am not an expert on that.

Q541 Chair: You are not familiar with that. Presumably, there would be some expertise in your company somewhere. Given that we have spent all this time discussing the Crown Estate and their relationship to the sea bed and how people then relate to that, obviously, if you as a company have experience of other jurisdictions where there are other arrangements, that would perhaps be helpful to us.

Andrew Jamieson: I am sure that, if you have further questions other colleagues can answer, we can certainly take them forward for you. I do not have direct experience of how those other countries have initiated their marine interests, although I highlight that we were part of a contingent that went from the UK to France with the Crown Estate to explain how things were done in the UK, as they were beginning to formulate how they would roll forward their offshore ambitions, which they are now beginning to do.

Q542 Chair: Therefore, similarly, you would not have any knowledge of Iberdrola’s involvement with coastal communities for the development of marine.

Andrew Jamieson: No, but the projects are far more advanced in the UK than they are anywhere else that we are developing around Europe.

Gareth Williams: In relation to marine energy wave and tidal, certainly, comments we have had from our members in the wave and tidal sector are that the Crown Estate have a world-leading position when it comes to leasing. Those companies that are now looking at opportunities in the northern and southern hemispheres are speaking to Governments about replicating that strategy in those particular countries. That is a clear strategy which the Crown Estate have developed and bears out what Andrew said in relation to the position in which the UK now finds itself.

Q543 Chair: That would tie in with the evidence we have already had about the Crown Estate having developed a great deal of technical expertise in the area. That is the point you are covering, is it not? But none of that really relates to the issues we discussed earlier about control, participation and local involvement, does it?

Gareth Williams: It does to an extent. I suppose that, if it ain’t broke, is there a need to fix it? That is a message that has come back from members in relation to offshore wind. Ernst & Young’s report suggests that the UK is regarded as the most attractive location for investment in the world. We also have a world-leading position in wave and tidal. In terms of priorities we have to ask ourselves whether we should be focusing on continuing that approach, making sure we get it right and maximising the economic and social benefits, or do we look at the structures and risk changes that might disrupt our position?

Q544 Chair: That is helpful in terms of raising the economic and social benefits. A whole string of witnesses have given evidence indicating just how unhappy they are in their relationship with the Crown Estate, which do not seem to consult them about anything at all and produce decisions that impact local communities without any involvement, consultation and awareness, and they fail to maximise local economic input in these provisions. The experience of your companies or members is one thing, but most of the evidence we have had indicates that the locals are not nearly as happy as you are. Surely, this is something you have encountered or been aware of.

Gareth Williams: Certainly, from local authority membership some of that feeling has been conveyed. We know there are very strong feelings in parts of the highlands and islands in particular about those issues. I suppose we come back to the question of where the economy is just now. It is in a difficult place. We know that the public sector will be cutting back, and public sector jobs are particularly important in those regions. As a nation we are looking to rebalance towards investment and exports, and the sectors we might highlight in those areas, such as renewables, agriculture and tourism and the role that the ports play in those, are looking globally. The companies in those sectors are saying to us that they are relatively happy with the position as it stands with the Crown Estate. That is not to say it is perfect, but improvements have been made over the last few years. Our view is that the focus should be on getting it right for the economy.

Q545 Chair: The Crown Estate have been riding roughshod over local communities for years, so the interests of the economy and those of SCDI are generally in favour of that continuing. Is that a fair summary of your position?

Gareth Williams: No. We would like to see more community input. The issue of communication, which was highlighted earlier, is something we have heard at the same time. But you know better than I that the priority for people at present is jobs and economic growth, and that is likely to continue for the foreseeable future. These are industries that are ready to invest in those areas, and there will not be too many of them given the opportunities. We think that capitalising on those opportunities and having the right framework for that has to be part of it.

Q546 Chair: To follow that argument before we come to the point Alan is going to ask about, are you saying that, in the view of SCDI, changing the governance structure to give local people or communities, or local authorities, a greater involvement in this process would almost automatically result in fewer jobs being generated and the process being unduly delayed?

Gareth Williams: There are risks in changing structures, particularly when we know in relation to renewables that we have a world-leading position. At the same time, this is not an industry which will happen automatically; it is one that we have to make happen by getting it right on various aspects, including the leasing of the sea bed. There are risks. We hear from sectors such as ports and aquaculture that they have concerns about powers being passed to local authorities in those areas and what it would mean in terms of time scales and plans for their own investment.

Andrew Jamieson: To illustrate it by example, I tend to agree with your point that there are things the Crown Estate could do to improve; indeed, we have said that in our written evidence to the Committee. Having regard to the way we do projects, if you take onshore wind as an example, we look to engage with stakeholders of any description as early as possible when we are formulating an idea for a project. We will approach the statutory consultees before we have even got to the formal stage of scoping. We will take an informal sounding to bed down the scoping part of the planning exercise. What would they prefer to see in the scope and not out of it, and, indeed, what major issues do they see in the project going forward? We have from time to time changed the direction of our own projects.

We will then engage with the general public as early as we can. We find that the early engagement processes inform us as early as possible of issues that are likely to arise with the project, and we can solve them as early as possible in the project. It also gives those with whom you are engaging the confidence that you are someone with whom to do business and you listen to what they are saying. We have genuinely changed plans, and indeed dropped them, on the basis of feedback that we have had from some projects.

When we moved into the marine or offshore wind environment we have the same issues. We want to engage with those bodies or the general public as early in the process as possible. I think the Crown Estate have found themselves tied a wee bit in that they have been trying to manage numerous projects at the same time and then taken them into the public domain. That has been slightly frustrating for us and no doubt for the locals who then experience it.

When we announced the Argyll Array project, which was the Tiree Array project discussed during the previous session of the Committee, we pressed very hard for us to go to the island and speak to those communities as early as possible, and we did it just before the Crown Estate made their announcement.

Q547 Chair: When you say "just before", it was the day before

Andrew Jamieson: It was a maximum of 24 hours, yes. We would have preferred a much longer period, clearly. We have heard about how they have run the Pentland process, which is for marine projects-for wave and tidal projects. We have direct experience of the locals not being as fully informed as they might be by the Crown. Yes, I hear of those issues, but for the offshore wind industry, which is in its infancy, globally there are not many projects out there, let alone in the UK. For the marine wave and tidal sector, it is not even in its infancy; it is embryonic; largely, all that exists are test devices. It is very helpful to have a central body that has full sight over what is going on in the industry and can do its utmost to enable it to overcome barriers and progress. Admittedly, there are some deficiencies in its engagement and communications style, but there are many positives for this industry in having a central agency like that. For our industry to succeed, it will take all the pulling power of the entire industry, the statutory consultees, the general public, local authorities and Governments north and south to make it happen, because the barriers in front of us are there.

Q548 Chair: I understand that. Is there any reason why that centre of excellence possessed by the Crown Estate could not be moved to be almost a subsidiary of either Marine Scotland or some other structure so that issues relating to control and so on are then handled by somebody else? I very much take the point-we have had evidence from a number of people about this-that the Crown Estate have a considerable degree of expertise which we would not want to see broken up and lost, but you will also have heard in the previous session that the way it behaves leaves a great deal to be desired, and there is an understandable and genuine desire by local people, groups and organisations to have more of a say. That will require some sort of structural change. Surely, it is possible to have these blended together by some sort of reshuffle that does not lose the baby with the bathwater.

Andrew Jamieson: I do not necessarily hold that opinion. There are advantages as well as disadvantages in having a landowner with a separate regulatory or consenting body. For onshore wind we have that. Landowners can be private or public, and then the Government Departments will be the consenting bodies, if not the local authorities. Likewise, for offshore, the Crown Estate are the landowner and Marine Scotland will be the consenting body. Blending the two together would probably present other problems of distinction somewhere down the line in the planning processes. Therefore, there are advantages in having them separate. I do not see why the Crown Estate, given they have done so well in learning the lessons of what they did not do to help along the industrial community, could not also do more to help along further the public and community aspects. It is not for me to say that that whole organisation needs to be changed and merged with some other organisation, because any other organisation would have either those or other deficiencies.

Chair: That is helpful.

Q549 Mr Reid: Gareth, in your written evidence you noted the possibility of incorporating local procurement conditions into sea bed leases. Maybe you would explain to us how that would work.

Gareth Williams: My understanding is that at present there is a real difficulty generally in procurement processes about reflecting local economic impact, and both the Scottish Government and the UK Government are arguing within the EU that that position should change and there should be an element of scoring within procurement.

Q550 Mr Reid: Under current EU rules is it possible for a company like ScottishPower to specify local contractors?

Gareth Williams: I do not know the ins and outs in relation to offshore renewables. I am talking generally about the system and whether local economic impact can be taken into account. In relation to that, we recognise that it will not be possible for it to be at the same scale for every project. For some projects there will be greater opportunities to involve the local supply chain; for others in more remote locations, for example, that might not exist. Again, there might be an issue about specifying too clearly what that benefit should be in terms of the local supply chain. It may be the commitment would be there to stimulate over a longer period opportunities for local supply chains. If we are talking about a new industry, the developer may make a commitment to work with companies in that area so that they will be servicing the project for a longer term.

Q551 Mr Reid: Is this a condition that you think the planning authority should be writing into the grant of planning permission, or should it be a voluntary arrangement with the applicant?

Gareth Williams: I think we would need to see what the European Union decides in terms of EU policy in that particular area. There should be scope for that to be recognised in the award of all approvals, but there will be a range of criteria taken into account; it will not simply be local economic benefit. It would be a factor to be scored, and obviously a judgment would need to be made about what was appropriate for that particular project.

Q552 Mr Reid: Turning to andrew, what is ScottishPower’s view on insisting that, let’s say, subcontractors award contracts locally? What is the company’s policy on that?

Andrew Jamieson: I think that companies employing best practice should be doing that already. For example, we ran a "Meet the Developer Day" in Moffat on Monday of this week for a major onshore wind project in Dumfries. We have put out the tender for what we call tier 1 contracts, which would be the turbines, infrastructure and all the civil works. We have not yet awarded those contracts. When we award those contracts, an element will be how well they have done on local content; so we are specifying it ourselves. We had a "Meet the Developer Day" for local suppliers to come along and engage with us, and anyone else who might have been there on the tier 1 side, to find out how they can participate. There are ways and means to encourage that today, and we can stimulate that. In the past we have worked with the enterprise agencies to try to make that happen.

I have a slight reservation if it is over-prescribed in the planning conditions to the extent that developers like us cannot make it happen. For example, it would be great to say, "You can have this consent provided you build a factory that makes turbines." I cannot wave a magic wand to make that happen. That is an industry thing, and that was what I was referring to in terms of what the Crown, Governments and industry are doing to try to make all of that happen. If we are too over-prescriptive in all of that, there is a danger of creating an unlevel playing field and investors will start to go to the easier projects where those conditions do not exist. However, it is a slight concern. The wording of how we do those things could be brought about; it just needs to be done with the right balance to make sure that the expectations of what the developers will do with it are not so onerous that they could not actually do projects. I think we would be doing ourselves a disservice to the objective of trying to meet renewable targets and the potential for Scotland to do so.

Q553 Mr Reid: But, in principle, at the planning stage you would be willing to enter into some agreement with the planning authority.

Andrew Jamieson: It has been done before; it was done onshore in SPP6-planning guidance 6-in terms of the expectations of local content. The industry was adamant with Ministers at the time, "Don’t expect, because you have that clause in the planning guidance, that we will suddenly come up with a factory." There is a lot more to it than that in terms of creating the right economic conditions for somebody to invest in those types of facilities. But using local services is something which people can easily tap into. We have a lot more to do. This comes back to what the funds that the Crown Estate generate will be used for in terms of making sure we have the right skills, training and employment for local people and local services to participate in the renewable sector. There is a national as well as local need for that type of training and service.

Q554 Mr Reid: You referred to the Argyll Array earlier. I am sure you can understand the concerns on Tiree about the impact on the island. It is in my constituency. My reading of the views of the islanders at the moment is that, as far as the majority are concerned, the jury is still out on whether or not they will support the planning application. What they are really looking for from you as developer is to explain to them what the impact and the economic benefits to the island will be. Is that something you are planning to do before it goes to the planning stage?

Andrew Jamieson: Absolutely. We have been engaging very thoroughly with the trust on Tiree and with Argyll and Bute Council. Argyll and Bute Council has the ABRA initiative and other strategic plans in terms of what they are looking for in the development of renewable energy in that area. We have been engaging very heavily since the announcement was made that this project was in the offing. We have to do a lot of survey and environmental work, and indeed social economic work, to understand what the best design of that project is. There are huge engineering challenges. There is no grid, the water is very deep, the sea bed conditions are very hard rock, and the wave heights are very high. We have lots of technical issues to overcome, all of which feed into how you build that project and then service it. We are in discussion with both the Tiree trust and the local authority on what impact in terms of benefit to the island there could be in regard to employment. In turn, what knock-on effect would that have on housing requirements and infrastructure support? I hope that, if you speak to Argyll and Bute Council, they will agree we are in the thick of those discussions to try to resolve some of those issues, because they have to be looked at strategically.

Q555 Mr Reid: In your submission you said that benefit from the revenue that the Crown Estate collect should go to the local community. You did not seem to put in your submission anything about the developer making a financial contribution to the local community from the profits. Is that omission deliberate, or do you think the developer should be making a contribution?

Andrew Jamieson: First and foremost, I would like to see this industry get employment. Scotland missed the opportunity of developing technology with onshore wind in the 1980s. The Scandinavians took it because they created the market for it; for a long time they were world leaders in selling turbines. We have huge potential in Scotland for employment in jobs that we do not have in onshore wind or any other sector of renewables. I am working with colleagues at an industry level and with Governments north and south to try to bring manufacturers to Scotland, or indeed the UK, to build the supply chain so that we have the construction capacity for these projects. But we also have to look more locally at the servicing and maintenance of these projects over 20 to 25 years or longer. That means skills, training and educational support. Not all of that will be found very locally. The island of Tiree does not have a college, so clearly it will be Argyll or somewhere else on the mainland. First and foremost, developers need to look at how they can benefit the economy from maximising the number of jobs-to me, that is the priority-and the skills and training. That is not to say financial gains cannot be made by other communities at some point once all of that has been sorted out, but it is a very different case from what we have experienced in onshore wind because we have not been able to bring the same degree of employment prospects. This is now a huge opportunity for us.

Q556 Mr Reid: In your project on the Sound of Islay you have an agreement with the Islay Energy Trust. Can you explain what that agreement is and what benefits there will be to the island from it?

Andrew Jamieson: It is as much part of our engagement process and understanding of the local needs and issues with that trust. I think that over a period of five years we are supporting and paying the salary of a local development officer, a chap called Andy Macdonald. He acts as our eyes and ears on the island; likewise, he is able to explain to people the project, which is an array of 10 underwater turbines that we are looking to deploy in the middle of the decade. Andy is able to engage with fishermen, the harbour master and others that could provide services to this project. He can also reassure them about some of the myths that might otherwise have developed about the project stopping their business. It has been a very good relationship for us in terms of being able to inform the community. Likewise, the community has been able to express its opinions very directly back to us. It is a very constructive relationship in taking that energy project forward. We would hope that island would benefit directly from the energy there, particularly when you also have such a prominent and world-leading whisky industry on the island.

Q557 Mr Reid: Do you have any other suggestions for how developers could involve coastal communities in local schemes?

Andrew Jamieson: Lots of projects are very different and so are the coastal communities. I think developers should get out there and engage as much as they can. I note that we have been talking a lot about the Tiree project. It is a very unique circumstance. You have an island right next to a potentially very big project. You have projects on the east coast of Scotland. Some of them, like those on the Firth of Forth, have very different community aspects. What is right and wrong for employment and what are the benefits from the project need to be explored very deeply and locally. All the developers have a direct role in doing that. ScottishPower Renewables are not perfect at it, but we do a lot to try to get the best learning we can.

Q558 Mr Reid: Are the Crown Estate a help or inhibitor in terms of your community engagement?

Andrew Jamieson: It is neutral to slightly positive. They are not an inhibitor but they are not as proactive in doing community work as they are in looking at some of the more environmental aspects of planning processes, or the required engineering solutions to certain things for projects.

Q559 Chair: I want to return to SCDI and the question of procurement. We need some assistance about what is and is not reasonable in terms of EU rules and allowing this and that. I suspect that a lot of developers and companies hide behind European procurement rules when they do not necessarily need to. Is there an idiot’s guide to what can be pursued in terms of employing a certain number of local apprentices and all the rest of it? My understanding was that, if you were saying everybody who bid for this had to undertake to take on 20 local apprentices, as long as it applied to everybody, that was entirely acceptable under EU legislation, but lots of others try to wriggle out of it.

Gareth Williams: My present understanding is that it is very much slanted towards cost and efficiency in terms of public procurement. I am talking generally rather than in relation to any specific sector. The Scottish and UK Governments are trying to persuade Europe to change its rules in that particular area towards more local economic benefit, which would then enable you to look at where people were being employed. I am not talking about renewables, but there have been well-publicised examples of contracts in the Western Isles in relation to construction going to firms outwith Scotland who were bringing in people and stationing them essentially offshore. In the future, if there was greater focus on local benefits, that situation might change.

Q560 Iain McKenzie: Gareth, you mentioned earlier the possibility of incorporating local procurement conditions. I think we should focus on the possibility. Under EU procurement legislation, in the tendering process it would be possible but not absolutely guaranteed. I imagine that, when you go to the weighting of these particular contracts, cost and quality are the main two factors. Slanting the terms and conditions may be challengeable. If you went down that road and it was challenged, what impact do you think it would have on this fledgling industry?

Gareth Williams: The last thing you would want would be leases being awarded to one company based on a bid and it was challenged by another company on the basis that it was not competent under EU law. Obviously, that would slow up the investment.

Q561 Iain McKenzie: You spoke earlier about time scales. Would that have a dramatic impact on those time scales? You were talking about getting the industry up and running and developed.

Gareth Williams: Potentially. If European rules allowed that to be taken into account and those in this country were sure that what they were implementing was watertight and was not likely to be challenged, and that was widely understood by the industry, I am not sure it would have any impact on time scales. Presumably, it would arise if there was scope for disagreements in the process, but I am not aware of what the exact regulations are in this area. I would have to go away and think about that.

Q562 Iain McKenzie: Currently, there is a standstill period in the procurement process where I imagine that would be reviewed.

Gareth Williams: Yes.

Q563 Mr Reid: Do these rules apply only to public authorities? The reason I ask is that, certainly in the case of the Tiree project, the suggestion was that ScottishPower would build a base in Tiree to service the offshore wind farm. If, say, ScottishPower came forward and said they would do this, would these rules apply to them or only to public authorities?

Gareth Williams: My understanding is that the EU rules would apply to public authorities. It is the public procurement processes that are governed by it.

Mr Reid: They do not apply to a private company like ScottishPower.

Iain McKenzie: I think they do.

Chair: If a public authority is letting something to ScottishPower, my understanding is that the rules apply, but, if ScottishPower wished to prioritise, say, local employment over some other factors, they would be free to do so.

David Mowat: I believe if it is a procurement over a certain size it would have to be open to anybody who wanted to bid.

Iain McKenzie: There is a threshold over which you have to pass. If you cross that and it is challenged, it can take almost two years to resolve it through the courts.

Chair: Even if it is a private company letting it.

Iain McKenzie: Yes.

Chair: This is a discussion for another report. We will see you back here next week when we will do that.

Q564 Iain McKenzie: Turning to sea bed revenues, can you explain the arrangements for the rent which the Crown Estate Commissioners collect from the marine renewable installations? Does this rent increase as profits increase?

Andrew Jamieson: As I understand it, it is a fixed pounds per megawatt-hour, or a percentage of revenues; in other words, if the wind farm does better, the Crown Estate would get more out of it. It is very similar to what happens in many onshore land rental arrangements. The Crown Estate will get a fee from us on signing the lease arrangement for the Tiree project, which is a one-off arrangement, and once we go to construction or go into operation they will get a small fee from the revenues based on pounds per megawatt-hour. The more efficient the wind farm, the more money the Crown Estate will make out of it, as will we. That is the incentive. You want a more efficient wind farm, and that is why we are going to offshore as well.

Q565 Iain McKenzie: What is the current level of rates paid to the Crown Estate per unit of electricity?

Andrew Jamieson: What are they proposing?

Q566 Iain McKenzie: What is the rate you are paying currently?

Andrew Jamieson: It is less than £1 per megawatt-hour.

Q567 Iain McKenzie: How much less than £1?

Andrew Jamieson: I think it is just over 10p less; it is in the 80s.

Q568 David Mowat: Can you remind us how much you get from the feed-in tariff in terms of offshore wind?

Andrew Jamieson: The revenues that flow will depend on the incentive mechanism that applies at the time. Certainly, by the time the Argyll Array project comes on we will be into a new incentive mechanism, but as of today you would be getting two ROCs. That is about £80 per megawatt-hour, plus the price of wholesale electricity, so it is about £130 per megawatt-hour, roughly.

Q569 David Mowat: A megawatt-hour.

Andrew Jamieson: Yes. You can turn that into £1.30 per kilowatt-hour.

Q570 David Mowat: I thought the solar feed-in tariff was £40 per kilowatt-hour.

Andrew Jamieson: Yes.1

Q571 David Mowat: I thought offshore wind was less than that but similar. I am surprised because electricity only costs £8 per kilowatt-hour; that is what consumers pay. You must be getting more than that.

Andrew Jamieson: No. The mechanism we have in today’s offshore world is that you get two ROCs plus the price of what we call brown power, which is the wholesale price of electricity. A ROC currently trades at about £40 per megawatt-hour. Therefore, it is £80 altogether, plus the price of electricity, which is currently about £50. That support is due to reduce from 2015-16 onwards.

Q572 Lindsay Roy: In your submissions, you suggest that the Crown Estate marine revenues in Scotland should contribute both to a national fund to be used for appropriate reinvestment and to the local communities most affected by developments. Is that a fair reflection of your views?

Gareth Williams: It certainly is our view.

Q573 Lindsay Roy: How would that be best administered?

Gareth Williams: We suggested in our submission that we could see the case for devolution of the national revenues to the Scottish Parliament for reinvestment particularly in low-carbon infrastructure, whether that is skills or other areas. In relation to communities, we acknowledge the caveats in terms of how you would define them in relation to particular projects that are well offshore. We supported that it should be communities directly affected rather than a wider area, and that might be in relation to the projects themselves, the associated infrastructure or the construction of those projects.

Q574 Lindsay Roy: Whether it is retained at Westminster or devolved, do you agree that there should be a 50/50 split between local communities and the Government? Is that the line you would take?

Gareth Williams: I would not want to make an arbitrary split. These are judgments others will make. From our point of view, we are keen that, broadly, it should be reinvested back into the low-carbon economy at national and community level, but we also acknowledge that, particularly at national level, it will be a long time before significant revenues are generated.

Q575 Lindsay Roy: Andrew, am I right that you agree in principle with the Big Lottery Fund as a way of distributing the money?

Andrew Jamieson: We simply said that in principle it looked like a body that could apply a general set of rules as to who should receive the funding. There is never an easy answer to this. When speaking to you, I have stressed the need to take this industry forward, capitalise on it and get jobs on the ground, essentially, so that we have a long-lasting industry. That needs support, and where the funds are to come from for it needs to be explored. I agree that communities should gain from having an offshore wind industry. Whether it is employment or cash is another question.

Q576 Lindsay Roy: Therefore, in the present economic climate it should be as quickly as possible because of employment opportunities.

Andrew Jamieson: Absolutely, yes. But the question of how to disburse funds, for example, is a highly complex one. If you take our project at Tiree, which we have discussed at length today, that is very near development. It is simple to identify that Tiree should get something out of a project. Other projects are far more difficult. I mentioned ones in the Firth of Forth. How you would define communities there is a very different thing.

Q577 Lindsay Roy: Establishing the criteria is a big challenge.

Andrew Jamieson: It is a very different question. We also have a much bigger project in East Anglia, which is 7,200 MW versus 1,800 MW for Argyll, but infrastructure in that part of south-eastern England is already there, so the impacts and benefits of that project are a completely different consideration.

If we look at our experience in dealing with community benefits versus the cash alternative for onshore projects, a witness in the previous session said that there had been different examples and some worked well and some less well. Sometimes the local authority takes all of the money; sometimes it is the community council that gets all the money. The local authority might be the most knowledgeable body to disburse it, but you may have real difficulty getting hold of it.

Q578 Lindsay Roy: Sometimes it is apprenticeships in local communities.

Andrew Jamieson: Quite. You also have community councils that have more money than they know what to do with if they have a number of projects. None of these are easy. Argyll and Bute Council take these funds and put them into a model that splits the funding to local uses within a certain radius of a project, but the wider funds will go to the wider local authorities. They apply a 60/40 split. That is onshore. What should happen offshore, as I mentioned to Mr Reid, is for discussion with that council as we see what is appropriate going forward.

Q579 Lindsay Roy: Gareth, I think I am right in saying that SCDI believe that the revenues raised in Scotland should stay in Scotland. Is that the case? If so, why?

Gareth Williams: That is the general view among our membership. There are issues about financial accountability of the Parliament which has seen revenues devolved. There are issues about how the industry itself is being developed. Clearly, there is a strong lead from the Scottish Government across a range of issues, such as skills, port and harbour developments and so on. We would see sense in aligning the revenues for reinvestment within Scotland with that work that is already under way.

Q580 Lindsay Roy: What is the case for retaining the management of those resources in London or is there a case?

Gareth Williams: We have not made that particular case. As I understand it, the Crown Estate are able to borrow based on the value of their wider estate and then invest that money within Scotland. If you are talking about things like subsea cables and so on, clearly the projects that will be enabled by that will not be generating revenues that allow you to invest in a cable; it will have to be up-front investment, so you will have to find that from elsewhere. I suppose that is one argument, but it is not one we have made.

Andrew Jamieson: We deal as much with the Crown Estate in Edinburgh as we do with it in London. There is a significant presence in Edinburgh. Indeed, for some projects the Crown Estate have put one of their officers into our offices specifically to deal with them.

Q581 Lindsay Roy: But the broad administration and management remain in London.

Andrew Jamieson: Yes.

Q582 Lindsay Roy: How can you ensure transparency and accountability in relation to how the resources are used? Is there a mechanism whereby you can define what is going to Scotland, because at the present time, I think it is very difficult to do so?

Gareth Williams: We have certainly suggested there should be more transparency about what is raised and spent in Scotland. This inquiry has probably been helpful in pushing that forward. I know that the Crown Estate have an annual report for Scotland which has figures within it. I would imagine it is about developing that further.

Andrew Jamieson: I cannot see why we would not be able to learn what the Crown Estate’s revenues were from Scottish offshore marine projects.

Q583 Lindsay Roy: If the management and administration of the Crown Estate were devolved to Scotland, what implications would that have for ScottishPower Renewables?

Andrew Jamieson: I do not hold a particular view on the devolution of management. There is a huge advantage in our being able to deal with a one-stop shop in the form of the Crown Estate. It is one thing to look at projects around the UK, but you have stakeholders like the shipping industry that move all round the UK and it helps to have a landlord that knows the issues of all the projects being planned. To us that aspect is important.

Q584 Lindsay Roy: You would not have that if it was controlled by the Scottish Parliament or a quango or quasi-governmental organisation.

Andrew Jamieson: I do not hold any particular view. I can only cite the advantages that have come to the industry thus far of having the Crown Estate run the way that it is.

Q585 Lindsay Roy: As a UK-wide organisation.

Andrew Jamieson: Equally, they have a strong focus on developing the Scottish offshore wind and marine renewable sector. Marine renewables, being wave and tidal, are predominantly Scottish, and they have placed huge emphasis on driving that forward very hard.

Q586 Chair: You referred to the gains of having a one-stop shop. You heard our earlier discussion about strategic planning powers possibly being given to Marine Scotland and they would have that function, but surely there would have to be local involvement in tactical planning with somebody like a local authority or an equivalent. That happens at the moment, does it not? Therefore, breaking up responsibilities to some extent for that local management would not cause you any major problems, would it? I am trying to identify what it is we could do that would make local people happy and would not at the same time cause you major difficulties.

Andrew Jamieson: Off the top of my head, I cannot say "huge", but I would need to give a little more thought to that. The question is whether functions are replicated throughout Scotland that give the industry difficulty in having to deal with the same issues. If decision making is down to local authorities, then we are dealing with a number of bodies as opposed to one central body. If it was a Scottish Government-run agency, that might well tick the box. I would need to unpick that a little more and explore it.

Q587 Chair: A lot would depend on what functions the local authority had in terms of approval. You can understand the locals being unhappy about a sudden announcement that such and such will happen on their doorstep. You do consult, you say, locally. Therefore, if it was the local authority with whom you consulted on some of these elements within an overall strategic plan, you would still be able to retain many of the contacts with the shipping industry and so on which would be dealt with on a national level, while at the same time having some sort of input from the locals.

Andrew Jamieson: There are always advantages. A centralised model works at certain levels of efficiency, but there are inefficiencies when you get down to local levels.

Q588 Chair: That is right.

Andrew Jamieson: Equally, if you go to the extreme where everything is local, no national strategy is being driven. It is always a matter of finding the right balance across all of that. I think local authorities should be fully involved in the evolution. In the previous session Mr Roy asked what the strategy was for development. I do think that is where the local authorities are involved. I would have thought they had been in the past; they must have been. I am sorry; I am confusing it with onshore stuff many years ago. Engagement in consultation with local authorities could answer many of these issues. If that has not been happening, that will add to frustrations when plans or intentions are suddenly announced.

Q589 Chair: That is right. What I am struggling to identify are those things which, from your perspective, would have to be retained centrally, or what elements of the centre of expertise should be retained in a central function and what could be handed down-what can go and what has to stay. We will have to make some sort of recommendations on this. We could make it all delightfully vague and leave it to somebody else to sort out, but we would prefer to try, if possible, to identify the sort of things that should be kept centrally and those that could be passed down locally.

Andrew Jamieson: There are quite a few planning issues that affect the entire industry on which the Crown Estate are helping. It could be things like how to deal with the shipping, fishing and aviation sectors, because wind turbines interfere with radars. The Crown Estate are spending money either on doing survey work with developers to help them with projects or, at an industry level, are providing solutions to some of these common issues. I do not know that that is a role for local authorities to sort out. There are certain aspects of the Crown Estate’s present duties that they did not do before. They kept everything at arm’s length and acted purely as a landowner. Now they have become far more proactively involved and engaged, so for the industry it has been a huge benefit. I would not like to see those benefits diluted at all.

Q590 Chair: The Crown Estate as developer have been helpful.

Andrew Jamieson: Yes.

Q591 David Mowat: In terms of what is devolved, another point is that at the moment the whole subsidy structure to make these things viable is centrally administered, is it not?

Andrew Jamieson: Yes.

Q592 David Mowat: Clearly, if that was ever devolved, it might change matters, but, in regard to your liaison with DECC and how all of that works, that is done uniformly across the whole country in terms of the whole viability of the project.

Andrew Jamieson: The Scottish Government have some discretion within the framework, so they can adjust things under the renewables obligation. When DECC brings out a consultation on the renewables obligation, the Scottish Government bring one out shortly thereafter, and they do not always propose exactly the same thing.

Q593 David Mowat: So you get different tariff structures.

Andrew Jamieson: You can do and you have done in the past for wave and tidal devices where the Scottish Government have sought to provide greater support than at UK level.

Q594 David Mowat: How does that work for bills subsequently? Does it just go on bills in Scotland or on bills across the UK?

Andrew Jamieson: It goes on bills throughout the UK, but, with respect, the imbalance is a very small part of the whole energy billing system, because to date we are talking only about experimental projects.

Q595 Iain McKenzie: The level of capital investment planned by the Crown Estate in Scotland over the next five years is an average of £4 million per year. How does that compare with the amount that has been invested in marine renewables by the Scottish Government, its development agencies and local authorities?

Andrew Jamieson: Forgive me for asking for clarification. Does "marine" mean offshore wind? It cannot mean offshore wind.

Q596 Iain McKenzie: I would not think it does; it means wave and tide.

Andrew Jamieson: I think it means wave and tidal device work. It is a useful sum to have invested. Each device has cost significantly more than that to date. This is very embryonic technology. We are starting it on a curve here, and we would expect to see the cost come down with experience. It does not compare today. It does not mean to say that in the very near future it would not be a reasonable amount to invest, but I would always encourage more to be invested to take forward that industry, because this is Scotland’s true and real chance of having a renewable sector where the managerial benefits of the design sit within Scotland and it is something we can then export around the globe, in the same way that the Danes took onshore wind technology in the 1980s and capitalised on that.

Gareth Williams: In terms of marine renewables, the companies we have spoken to saw a particular role for the Crown Estate in addressing industry-wide challenges. Often, the technology companies are very small and at this stage are operating in a very high-risk industry. I am highlighting R and D on components, moorings, foundations and also investment in environmental data as areas where the Crown Estate have played a useful role, and could play a more useful one, in the next few years.

Q597 Iain McKenzie: How would you assess the Crown Estate’s response to devolution, and how do you think it has integrated with the Scottish Government and its development agencies and local authorities?

Gareth Williams: Our view is that over the last few years dialogue has improved with the memorandums of understanding that have been developed. I understand that those are now being taken forward with the Scottish Government and also, potentially, local authorities. Although the Crown Estate have invested significantly in their Edinburgh office in recent years and have in it a level of expertise that has been very useful, particularly to the marine energy and offshore wind industries, we regret that there is no longer a principal officer for Scotland with the remit to engage more with civic organisations and the Parliament. We would be supportive of the reintroduction of that sort of position at senior level within the Crown Estate.

Andrew Jamieson: I do not have a position on where they are with devolution, and I guess that is a debate between themselves and the Scottish Government. I cannot think of anything at industry level where the Crown Estate have not enacted well enough, although I am sure people in the Scottish Government would contradict me, to further the agenda for the renewables sector, be it marine, as in wave and tidal, or offshore wind. The Crown Estate have been pressing very hard for that, and that is fully aligned with what the Scottish Government seek to do. From that perspective, I have seen only a very constructive input and dialogue from the Crown Estate vis-à-vis the Scottish Government.

Q598 Chair: As I said to the previous witnesses, do you have any answers you have already prepared to questions we have not put or any additional points you want to raise with us that we have not covered?

Andrew Jamieson: Frankly, no. My main point is that we are trying to build this industry, and the more support we can have to take it forward the better. The Crown Estate have done very well thus far. That is not to say they are perfect; no one is. The industry provides a potential for Scotland and the UK, but it must be given support to maintain the momentum on investor confidence.

Gareth Williams: I have nothing to add, Chair.

Chair: Thank you very much for coming along.

[1] Note by witness: “I qualified this by saying that I am not an expert in solar tariffs.”

Prepared 19th March 2012