Framework Document between The Scottish Government and Crown Estate Scotland

15. Management and disposal of fixed assets

An accurate and up-to-date record of current and non-current assets should be maintained, consistent with the Property: Acquisition, Disposal & Management section of the SPFM. Crown Estate Scotland is also subject to the Scottish Government Asset Management Policy, including the requirement for acquisition of a new lease, continuation of an existing lease, decision not to exercise a break option in a lease or purchase of property for accommodation/operational purposes, to be approved in advance by Scottish Ministers. The Property Controls Team should be consulted as early as possible in this process.

Assets should be recorded on the balance sheet at the appropriate valuation basis in accordance with the Financial Reporting Manual (FReM). When an asset (including any investment) suffers impairment, when there is significant movement in existing provisions and/or where a new provision needs to be created, this should be communicated to sponsors and Scottish Government Finance as soon as possible to determine the implications for Crown Estate Scotland’s budget.

Any funding for expenditure on assets by a third party should be subject to appropriate arrangements to ensure that they are not disposed of without prior consent and that a due share of the proceeds can be secured on disposal or when they cease to be used by the third party for the intended purpose, in line with the Clawback guidance in the SPFM.

Unless covered by a specific delegated authority Crown Estate Scotland must not enter into any finance, property or accommodation related lease arrangement – including the extension of an existing lease or the non-exercise of a tenant’s lease break - without prior approval from sponsors. Before entering/ continuing such arrangements Crown Estate Scotland must be able to demonstrate that the lease offers better value for money than purchase and that all options of sharing existing public sector space have been explored in line with the Single Scottish Estate programme.

Non-property/accommodation related operating leases are subject to a specific delegated authority. There must be capital Departmental Expenditure Limit (DEL) provision in the budget allocation for finance leases and other transactions which are in substance borrowing.

15.1 Register of Assets

All assets (property, plant and equipment, and investment assets) are to be properly recorded and updated as necessary. Crown Estate Scotland shall review and share the Fixed Asset Register and Investment Valuation at the year end with the Sponsor Team on an annual basis by 30 June following the year end.

15.2 Disposal of Assets

Crown Estate Scotland shall maintain an accurate and up-to-date record of its current and non-current assets consistent with the Property: Acquisition, Disposal and Management section of the SPFM. Disposal of any assets should be in accordance with the SPFM and statutory requirements in the 2019 Act.

The Scottish Government’s Property Controls Team should be notified via the Sponsor Team of relevant proposed disposals of property held by Crown Estate Scotland for operational purposes (as opposed to those held for investment purposes) at the earliest opportunity and should then submit them for trawl at least 1 month prior to being advertised on the open market.

Any proposal to acquire land, buildings or other rights in property, unless covered by a specific exemption, should comply with the SPFM, taking account of the statutory duties regarding management of the Scottish Crown Estate. Crown Estate Scotland is also subject to the Scottish Government Asset Management Policy, including the requirement for acquisition of a new lease, continuation of an existing lease, decision not to exercise a break option in a lease or purchase of property for accommodation/operational purposes, to be approved in advance by Scottish Ministers. The Scottish Government Property & Construction Division should be consulted as early as possible in this process and at least two years notice should be given in advance of a lease event.

Information concerning Crown Estate Scotland should be accurately recorded and updated as necessary on the Office of Government Commerce electronic Property Information Mapping System.

15.3 Investments

Crown Estate Scotland will undertake acquisitions, disposals and investments in line with its legislative duties and investment strategy which is to be agreed by Scottish Ministers.

15.4 Grant Funding to Third Parties

Unless covered by a specific delegated authority or any grant arrangements/schemes which were in place at the time of this Framework Agreements Crown Estate Scotland must not provide grant funding to a third party without prior agreement from the Sponsor Team and Scottish Government Finance. Guidance on a framework for the control of third party grants is provided as an annex to the Grant and grant aid section of the SPFM.

15.5 Recovery of Grant-Financed Assets

Where Crown Estate Scotland has financed expenditure on capital assets by a third party, Crown Estate Scotland shall use its best endeavours to ensure that any such assets above an agreed value are not disposed of by the third party without Crown Estate Scotland’s prior consent. Crown Estate Scotland shall therefore ensure that such conditions are sufficient to secure the repayment of its due share of the proceeds - or an appropriate proportion of them if the grant was for less than the whole cost of acquisition and/or sale or improvement.

Crown Estate Scotland shall also ensure that if the assets created by grants made by Crown Estate Scotland cease to be used by the recipient of the grant within 5 years from the date of completion for the intended purpose an appropriate proportion of the value of the asset shall be repaid to Crown Estate Scotland.