Long-term management of the crown estate in Scotland: analysis of consultation responses

5. Securing the Benefits for Scotland and Communities

Background

The Scotland Act 2016 amends the Civil List Act 1952 to require that net revenue from the Scottish assets is to be paid into the Scottish Consolidated Fund after devolution.

The proposed legal framework to govern the interim management of the assets includes provisions for the interim management body to retain a proportion of the revenue and a proportion of mining income. There will be flexibility for Scottish Ministers to vary these amounts under the interim arrangements. The consultation proposed that the long term arrangements should include similar flexibility for Ministers to vary the proportion of net revenue that may be retained by the manager of an asset.

Question 38: Should the future framework include flexibility for Scottish Ministers to vary the proportion of revenue retained by the manager?

5.1 165 (78%) respondents answered this question. Table 22 in Annex 1 shows responses by category of respondent. Table 5.1 summarises these responses.

Table 5.1: Summary of views on whether the future framework should include flexibility for Scottish Ministers to vary the proportion of revenue retained by the manager

Response	No. of respondents	% of all respondents
Yes	92	56
No	47	28
Don't know	26	16
Total respondents	165	100

5.2 The majority (56%) of respondents who provided a view considered that the future framework should include flexibility for Scottish Ministers to vary the proportion of revenue retained by the manager. Whilst most individuals (63%) were of this view, less than half (47%) of organisations agreed.

5.3 Around one quarter (24%) of organisations stated that they did not know whether or not Scottish Ministers should have the flexibility to vary the proportion of revenue retained by the manager, suggesting that further information is required before informed decisions can be taken.

How to invest capital proceeds in future

The Scotland Act 2016 does not prevent assets being sold but requires - through the insertion of section 90B(8) of the 1998 Act - that all capital receipts from the sale of assets to be reinvested into the estate. This reflects the way in which the estate has been managed to date as a single entity, with the capital value of one part of the estate used to enhance opportunities elsewhere in the estate.

Question 39: Should the arrangement where the capital value of one part of the estate can be used to enhance opportunities elsewhere in the estate be continued?

5.4 165 (78%) respondents answered this question. Table 23 in Annex 1 shows responses by category of respondent. Table 5.2 summarises these responses.

Table 5.2: Summary of views on whether the arrangement where the capital value of one part of the estate can be used to enhance opportunities elsewhere in the estate can be continued

Response	No. of respondents	% of all respondents
Yes	125	76
No	15	9
Don't know	25	15
Total respondents	165	100

5.5 The majority (76%) of respondents who provided a view considered that the arrangement where the capital value of one part of the estate can be used to enhance opportunities elsewhere in the estate should be continued. A significant majority of organisations (73%) and individuals (78%) were of this view.

Question 40: Should the current duty of maintaining the value of the estate and the return obtained from it be continued or amended for the investment of capital proceeds?

5.6 161 (76%) respondents answered this question. Table 24 in Annex 1 shows responses by category of respondent. Table 5.3 overleaf summarises these responses.

Table 5.3: Summary of views on whether the current duty of maintaining the value of the estate and the return obtained from it should be continued or amended for the investment of capital proceeds

Response	No. of respondents	% of all respondents
Continue	79	49
Amend	50	31
Don't know	32	20
Total respondents	161	100

5.7 There was no overall majority view in favour or against the proposal that the current duty of maintaining the value of the estate and the return obtained from it should be continued or amended for the investment of capital proceeds. Around half (79 or 49% of respondents) would like to see the current duty to continue; 50 or 31% of respondents would like the duty to be amended. One fifth of respondents (20%) did not know whether or not this duty should be continued suggesting more information is required on which to base informed views.

5.8 Amongst individual respondents there was a majority (59%) in support of the proposal. The level of support (38%) amongst organisations was much lower.

Question 41: Should capital proceeds from a sale in one area be invested in the same area or should there be discretion to invest anywhere in Scotland?

5.9 162 (76%) respondents answered this question. Table 25 in Annex 1 shows responses by category of respondent. Table 5.4 summarises these responses.

Table 5.4: Summary of views on whether capital proceeds from a sale in one area should be invested in the same area, or should there be discretion to invest anywhere in Scotland?

Response	No. of respondents	% of all respondents*
Invest in same area	38	23
Discretion to invest anywhere	106	65
Don't know	18	11
Total respondents	162	100

* Percentages may not total 100% exactly due to rounding

5.10 The majority (65%) of respondents who provided a view considered that there should be discretion for capital proceeds from a sale in one area to be invested anywhere in Scotland. Organisations were more strongly in favour than individuals with 72% of organisations compared with 60% of individuals in support of discretion.

Maintaining the estate and future investment to secure the future benefits

The administration and capital costs of maintaining the estate and planning to secure future benefits are currently funded from the gross revenue budget or the capital budget, including any receipts from the sale of capital assets.

The plan is to continue funding maintenance and investment costs from gross revenue or the capital budget. However, where management of assets is further devolved, it cannot be guaranteed that those individual assets will generate sufficient revenue to cover the costs, or that the capital base associated with those assets will be sufficient for future investment requirements.

A possible solution is to ensure access to revenue and capital funding from other parts of the estate.

Question 42: Should it be possible for the capital or maintenance requirements for an individual asset to be funded from another part of the estate, even if management of the assets are devolved to the local level?

5.11 162 (76%) respondents answered this question. Table 26 in Annex 1 shows responses by category of respondent. Table 5.5 summarises these responses.

Table 5.5: Summary of views on whether it should be possible for the capital and maintenance requirements for an individual asset to be funded from another part of the estate

Response	No. of respondents	% of all respondents*
Yes	103	64
No	22	14
Don't know	37	23
Total respondents	162	100

* Percentages may not total 100% exactly due to rounding

5.12 The majority (64%) of respondents who provided a view considered that it should be possible for capital and maintenance requirements for an individual asset to be funded from another part of the estate. Amongst the 37 respondents who did not know, 22 were organisations, comprising 30% of the organisations who responded to the question.

Funding for strategic initiatives and other uses

The current manager has operated grant schemes and also provided funding for strategic initiatives such as the Scottish Aquaculture Research Forum and funding of strategic research to accelerate commercial-scale development of offshore wind, wave and tidal renewable energy. The consultation outlined that there is value in enabling these types of expenditure to continue to be funded from the gross revenue, and consider that some, or all, of these activities may need to be managed at the national level.

Question 43: Should funding of strategic activities from Crown Estate resources continue?

5.13 165 (78%) respondents answered this question. Table 27 in Annex 1 shows responses by category of respondent. Table 5.6 summarises these responses.

Table 5.6: Summary of views on whether funding of strategic activities from Crown Estate resources should continue

Response	No. of respondents	% of all respondents
Yes	137	83
No	5	3
Don't know	23	14
Total respondents	165	100

5.14 A substantial majority (83%) of respondents who provided a view considered that funding of strategic activities from Crown Estate resources should continue. Only five individual respondents disagreed; 23 respondents, largely individuals, did not know.

Question 44: If yes, should these strategic activities be managed at the national level?

5.15 158 (75%) respondents answered this question. Table 28 in Annex 1 shows responses by category of respondent. Table 5.7 overleaf summarises these responses.

5.16 A substantial majority (81%) of respondents who provided a view considered that these strategic activities should be managed at the national level, including 85% of organisations and 77% of individuals.

Table 5.7: Summary of views on whether these strategic activities should be managed at the national level

Response	No. of respondents	% of all respondents*
Yes	128	81
No	15	9
Don't know	15	9
Total respondents	158	100

* Percentages may not total 100% exactly due to rounding

Management of liabilities

The Scottish Government considers that there is good reason for the manager of an asset to be normally responsible for the liabilities, with provision for a lease agreement to cover the management of liabilities, i.e. the personal taking on the responsibility for management of an asset, or for controlling use of the estate, should take on the responsibility for managing the associated liabilities. However, this may result in local managers taking on significant liabilities and it is not possible in advance to be sure that the revenue from individual assets or groups of assets at the local level will be able to cover these liabilities.

There may be merit in consideration of either those assets with significant liabilities being managed at the national level or for pooling the liabilities at the national level. Any liabilities sitting at the national level could potentially be managed in closer alignment with other liabilities of the Scottish Ministers to insulate against risks.

Question 45: Should the person taking on the responsibility for management of an asset normally take on the responsibility for managing the associated liabilities?

5.17 163 (77%) respondents answered this question. Table 29 in Annex 1 shows responses by category of respondent. Table 5.8 overleaf summarises these responses.

5.18 A substantial majority (80%) of respondents who provided a view considered that the person taking on the responsibility for management of an asset should normally take on the responsibility for managing the associated liabilities, including 79% of organisations and 80% of individuals.

Table 5.8: Summary of views on whether the person taking on the responsibility for management of an asset should normally take on the responsibility for managing the associated liabilities

Response	No. of respondents	% of all respondents
Yes	130	80
No	11	7
Don't know	22	13
Total respondents	163	100

Question 46: Should the liabilities for land restoration and residual liabilities after decommissioning of marine infrastructure be managed locally or nationally?

5.19 164 (77%) respondents answered this question. Table 30 in Annex 1 shows responses by category of respondent. Table 5.9 summarises these responses.

Table 5.9: Summary of views on whether the liabilities for land restoration and residual liabilities after decommissioning should be managed locally or nationally

Response	No. of respondents	% of all respondents
Locally	31	19
Nationally	108	66
Don't know	25	15
Total respondents	164	100

5.20 The majority (66%) of respondents who provided a view considered that on decommissioning of marine infrastructure, the liabilities for land restoration and residual liabilities should be managed nationally. Local authority views differed from those of other categories, with the balance of their views in favour of local management.

Question 47: Should the costs associated with management of liabilities be included in the overheads for estate management?

5.21 163 (77%) respondents answered this question. Table 31 in Annex 1 shows responses by category of respondent. Table 5.10 overleaf summarises these responses.

Table 5.10: Summary of views on whether the costs associated with management of liabilities should be included in the overheads for estate management

Response	No. of respondents	% of all respondents
Yes	120	74
No	12	7
Don't know	31	19
Total respondents	163	100

5.22 The majority (74%) of respondents who provided a view considered that the costs associated with management of liabilities should be included in the overheads for estate management. 68% of organisations and 78% of individuals were of this view.

Question 48: Do you have any other views on the devolution of the management or revenue of the Crown Estate

5.23 101 (48%) of respondents provided views in response to this question, although many repeated the views stated previously and/or emphasised their opposition to devolution of the management of the Crown Estate.

5.24 A few overarching themes emerged from responses:

• There is no one-size-fits all model of devolved management, but different arrangements will be required for different assets. For example, it may be appropriate to manage some assets at community level in order to benefit from local stewardship and knowledge, but overarching strategic guidance and resourcing may be required to ensure sustainability, consistency and broader resourcing.
• The focus of the consultation is on assets, but many people are at the centre of developments too, in particular, tenants on rural estates, and current Crown Estate management staff. Their needs and concerns at this time of change should be considered and appreciated.
• Much more information is required about costs, risks, liabilities and broader support, before decisions on management can be taken by potential devolved management bodies. Expectations over revenue generation should be managed, including understanding what can be expected shorter term, and what may be generated over longer timeframes.

Other views on the devolution of the management of the Crown Estate

5.25 The current investment by the Crown Estate in research and development was highlighted by three respondents (other commercial/research; community groups and natural heritage/conservation) who emphasised the importance of maintaining this investment.

5.26 Three respondents (two from the "other" category of respondents; one natural heritage/conservation) called for devolution to be undertaken in an open and inclusive manner, and involve current staff in consultation on developments.

5.27 Three respondents (natural heritage/conservation; fisheries/seafood bodies; other commercial/research) emphasised their view that wider links with counterparts in the rest of the UK and links with broader statutory frameworks (such as Freedom of Information) should continue post-devolution.

5.28 Two respondents, both from the leisure and tourism sector, recommended the establishment of a clear process for complaints and appeals relating to actions taken or not taken by a body managing Crown Estate assets.

5.29 Some respondents took the opportunity to express concerns over the risks they associated with potential fragmentation: inconsistencies in management; loss of expertise; loss of opportunity to cross-subsidise. A few respondents urged that obstacles should not be put in the way of potential investors in national infrastructure and assets.

Other views on the devolution of the revenue of the Crown Estate

5.30 Many respondents provided views on the use of the revenue generated from the Crown Estate, with a general consensus that some of the income derived should be re-invested in the asset and/or the local community. For example, leisure and tourism respondents wished to see income generated from mooring dues to be directed to a Coastal Communities Fund in order to provide financial assistance to local schemes to improve marine leisure facilities; lease income from fish farms could be used to further protect and enhance wild salmon fishing; and revenue generated by marine resources should fund marine planning.

5.31 A few respondents emphasised that income generation should be given time to develop and may remain relatively modest. One enterprise body highlighted what they perceived to be the benefit of a diverse collection of assets, in that this provides investment resilience, and allows for the nurturing of weaker parts of the portfolio which could grow in value over time.