Framework Document between The Scottish Government and Crown Estate Scotland

14. Non-staff expenditure

14.1 Capital Expenditure

Subject to being above Crown Estate Scotland’s capitalisation threshold as set out in their published accounts all expenditure on the acquisition, sales of assets, or creation of fixed assets shall be capitalised on an accruals basis. Expenditure to be capitalised shall include the:

• acquisition and or sales of assets, reclamation or laying out of land;
• acquisition, sales of assets, construction, preparation or replacement of buildings and other structures or their associated fixtures and fittings;
• acquisition and/or sale of assets, installation or replacement of movable or fixed plant, machinery, vehicles and vessels; and
• staff costs where it is appropriate for them to be capitalised.

Proposals for large-scale individual capital projects, acquisitions and/or sales will normally be considered within Crown Estate Scotland's corporate planning process and within the context of its Investment Strategy.

14.2 Lending, Guarantees, Indemnities, Contingent Liabilities and Letters of Comfort

Any lending must be in line with the guidance in the Borrowing, Lending & Investment section of the SPFM on undertaking due diligence and seeking to establish a security. Unless covered by a specific delegated limit Crown Estate Scotland must not lend money, charge any asset, give any guarantee or indemnity or letter of comfort, or incur any other contingent liability (as defined in the Contingent Liabilities section of the SPFM), whether or not in a legally binding form, without the prior approval of sponsors, Scottish Government Finance and where necessary the relevant committee of the Scottish Parliament. Guarantees, indemnities and letters of comfort of a standard type given in the normal course of business are excluded from this requirement.

14.3 Gifts, Losses and Special Payments

Unless covered by a specific delegated authority, prior approval from sponsors and Scottish Government Finance is required before making gifts or special payments or writing off losses. Special payments and losses are subject the guidance in the Losses and Special Payments section of the SPFM. Gifts by management to staff are subject to the guidance in the Non-Salary Rewards section of the SPFM.

14.4 Subsidiary Companies and Joint Ventures

Crown Estate Scotland is not permitted to establish any subsidiaries or enter into joint ventures without express approval from Scottish Ministers.

14.5 Financial Investments

Crown Estate Scotland will have the ability to invest surplus cash balances in financial savings products of investment grade, which are available in the UK and on terms which the Accountable Officer considers to be compatible with the requirements of Section 18 of the 2019 Act.

14.6 Unconventional Financing

Crown Estate Scotland shall not enter into any unconventional financing arrangement, unless agreed with the Sponsor Team.

14.7 Commercial Insurance

Crown Estate Scotland must take out commercial insurance where there is a legal requirement to do so, and in accordance with the guidance in the Insurance section of the SPFM. Crown Estate Scotland insures certain of the assets under its management or control on a commercial basis and may continue to do so. Any material change to the insurance effected by Crown Estate Scotland shall be notified in advance to the Sponsor Team and in line with Insurance section of the SPFM.