Framework Document between The Scottish Government and Crown Estate Scotland

3. Responsibilities and accountability

3.1 Governance and Accountability

Crown Estate Scotland must, so far as reasonably practicable, operate in a way which –

a) is transparent and accountable; and

b) is consistent with any other principle of good governance which appears to it to constitute best practice.

3.2 Relationship between Scottish Government and Crown Estate Scotland

Effective strategic engagement between the Scottish Government and Crown Estate Scotland is essential in order that they work together as effectively as possible to maintain and improve public services Estate Scotland and deliver improved outcomes.

Both the Scottish Government and Crown Estate Scotland will take all necessary steps to ensure that their relationship is developed and supported in line with the jointly agreed principles set out in the statement on ‘Strategic Engagement between the Scottish Government and Scotland’s NDPBs’.^[1]

The Scottish Government and Crown Estate Scotland will strive to maintain a strong working relationship characterised by cooperation and good communication, and particularly early warning from either side about any emerging risk or issue with significant implications for the Scottish Government or the operation or governance of Crown Estate Scotland.

The Scottish Government and Crown Estate Scotland are committed to regular dialogue and a constructive and transparent relationship in order that they work together as effectively as possible. If the possibility of a Ministerial Direction were to be under consideration, the Scottish Government would discuss the matter with Crown Estate Scotland to see whether a jointly agreed course of action can be reached^[2]. Such discussions may result in an amendment to this framework document to record the agreed understanding.

3.3 The Scottish Ministers

Crown Estate Scotland manages the whole Scottish Crown Estate and are ultimately accountable to the Scottish Parliament for the activities, capital funding and performance of Crown Estate Scotland and for ensuring that the Board is discharging its duties effectively. The Parliament will scrutinise the performance of Crown Estate Scotland directly as it does with all public sector bodies.

It is recognised that Crown Estate Scotland is reliant on Scottish Ministers fulfilling their roles and responsibilities to facilitate the efficient discharge of their responsibilities. The responsibilities of Scottish Ministers include:

• appointing the Chair and up to 8 Board Members and holding the Board to account for the performance of Crown Estate Scotland and its use of resources.
• determining the terms and conditions of Board membership and remuneration. The Scottish Ministers may remove the Chair or a member of the board in certain circumstances.
• approving Crown Estate Scotland's Corporate Plan including strategic objectives and key targets. This will include revenue targets, an investment strategy; and policy and performance framework within which Crown Estate Scotland will operate;
• approving any revisions to the Code of Conduct of the Crown Estate Scotland Board.
• approving the arrangements of revenue to capital transfer through Ministerial Direction;
• approving the budget for loans or grants to Crown Estate Scotland and securing the necessary Parliamentary approval;
• carrying out responsibilities specified in the 2017 Order or the 2019 Act such as appointments to Crown Estate Scotland’s Board and laying of the Annual Report and Accounts before the Scottish Parliament.
• approving pay remits or proposals and superannuation arrangements for the staff, Chief Executive, Chair and Board members;

3.4 Scottish Government Portfolio Accountable Officer

The Principal Accountable Officer for the Scottish Administration (the Permanent Secretary of the Scottish Government) has designated the Director General for Net Zero as the Portfolio Accountable Officer (AO) with overall accountability for Crown Estate Scotland.^[3]

The Portfolio AO’s duties are to establish a framework for the relationship between Scottish Government and a public body, oversee the operation of that framework, ensure the public appointments to the body are made appropriately and ensure that appropriate assurance is provided on the performance and governance of the body. These activities are known collectively as ‘sponsorship’. In practice, the Portfolio AO is likely to delegate some or all sponsorship duties to a Director or Deputy Director as Senior Sponsor and/or to other Scottish Government officials in a ‘Sponsor Team’. The responsibilities of a Portfolio Accountable Officer are set out in detail in the Memorandum to Accountable Officers for Parts of the Scottish Administration.

The Portfolio AO will:

• make sure the framework document is agreed between the Scottish Ministers and the Board of Crown Estate Scotland, reviewed regularly and oversee the operation of the roles and responsibilities set out;
• ensure that financial and other management controls being applied by Crown Estate Scotland are appropriate and sufficient to safeguard public funds and conform to the requirements both of propriety and of good financial management;
• in line with Code of Practice for Ministerial Appointments, ensure that public appointments are made in good time and secure appropriate skills, experience and diversity amongst Board members, working with the Chair on succession planning; that there is effective induction for new appointees; and ensure that there is regular review and a formal annual appraisal of the performance of the Chair;
• support regular and effective engagement between Crown Estate Scotland and the relevant Scottish Minister(s); and
• make sure there is clear, documented delegation of responsibilities to a Senior Sponsor and/or Sponsor Team and that the Board and senior officials of Crown Estate Scotland are aware of these delegated responsibilities.
• The Portfolio AO remains personally answerable to the Scottish Parliament for the effectiveness of sponsorship activity.

3.5 The Sponsor Team

The Sponsor Team’s primary function is to carry out the responsibilities delegated to it by the Portfolio AO, directly or via the Senior Sponsor, as described above. In addition to ensuring that the arrangements in this framework document operate effectively, managing public appointments and providing assurance to the Portfolio AO, the Sponsor Team will usually be the first point of contact for the body on any issue with Scottish Government. As part of the assurance they provide to the Portfolio AO, they must ensure that key actions and decisions agreed are documented and implemented. This includes ensuring that Scottish Government teams implement any agreed actions.

The Crown Estate Scotland Sponsor Team (CESST) is the Sponsor Team for Crown Estate Scotland. CESST, in consultation as necessary with the Principal Accountable Officer, is the primary source of advice to the Scottish Ministers on the discharge of Crown Estate Scotland’s responsibilities and the primary point of contact for Crown Estate Scotland in dealing with the Scottish Ministers. The Sponsor Team shall carry out its duties under the Director and the Deputy Director for Marine Directorate of the Scottish Government who shall have primary responsibility for overseeing the activities of Crown Estate Scotland and ensuring effective relationship between the Scottish Government and Crown Estate Scotland.

The Sponsor Team shall advise and brief the Scottish Ministers on:

• proposals that exceed delegated spending limits and/or which involve novel, contentious or repercussive proposals (see part 2, section 3.7 of this document); given that Ministers need to approve such decisions.
• appropriate budgets and/or financial targets to Crown Estate Scotland in the light of the Scottish Minister's overall public expenditure priorities;
• the appropriateness of the scale of net revenues forecast by Crown Estate Scotland and the timing for their surrender to the Scottish Consolidated Fund;
• requests by Crown Estate Scotland to borrow from Scottish Ministers; and
• the appropriateness of applications by Crown Estate Scotland for external funding (not loans);

In support of the Portfolio Accountable Officer the Sponsor Team shall:

on performance and risk management:

• monitor Crown Estate Scotland’s activities on a continuing basis through an adequate and timely flow of information from Crown Estate Scotland on performance, budgets, control and risk management.
• address in a timely manner any significant problems (financial or otherwise) arising in Crown Estate Scotland; including those flagged by Crown Estate Scotland’s Accountable Officer; making such interventions in the affairs of Crown Estate Scotland as judged necessary;
• ensure the activities of Crown Estate Scotland and the risks associated with them are properly and appropriately considered in the Scottish Government's risk assessment and management systems;
• ensure that the performance of Crown Estate Scotland’s Chair is assessed by Director/Deputy Director at least annually;
• ensure that appointments to the Board are made timeously and in accordance with the 2017 Order and the Code of Practice for Ministerial Appointments to Public Bodies in Scotland, as issued by the Commissioner for Ethical Standards in Public Life in Scotland.

on communication with Crown Estate Scotland:

• inform Crown Estate Scotland of relevant Scottish Government policy in a timely manner; advise on the interpretation of that policy; and issue specific guidance to Crown Estate Scotland as necessary;
• bring concerns about the activities of Crown Estate Scotland to the attention of the Chief Executive and/or Chair;

Senior Sponsor Director and Deputy Director:

• As Senior Sponsor the designated Scottish Government Director and Deputy Director have responsibility for overseeing and ensuring effective strategic relationships between the Scottish Government and Crown Estate Scotland which support alignment of Crown Estate Scotland with the National Performance Framework.
• the Director and Deputy Director will work closely with the Chair and Chief Executive and be answerable to the Portfolio Accountable Officer for maintaining and developing positive relationships with Crown Estate Scotland that are characterised by openness, trust, respect and mutual support. They will be supported by the Sponsor Team in discharging these functions.

3.6 Crown Estate Scotland - The Chair

The Chair is appointed by the Scottish Ministers in accordance with article 5 of the 2017 Order and in line with the Code of Practice for Ministerial Appointments to Public Bodies in Scotland as issued by the Commissioner for Ethical Standards in Public Life in Scotland.

The Chair is accountable to the Scottish Ministers. The Chair shall aim to ensure that Crown Estate Scotland’s strategic objectives and actions are in accordance with its statutory framework and are in line with the National Performance Framework; and that Crown Estate Scotland’s affairs are conducted with probity. The Chair shares with other Board Members the corporate responsibilities set out in part 1, section 3.7 of this document, and in particular the Chair is responsible for ensuring that Crown Estate Scotland fulfils the aim and objectives set by the Scottish Ministers.

The Chair has a leadership responsibility on the following matters:

• formulating the Board's corporate strategy;
• ensuring that the Board, in reaching decisions, takes proper account of guidance issued by the Scottish Ministers;
• encouraging high standards of propriety and regularity;
• representing the views of the Board to the general public;
• ensuring that the Board has a balance of skills appropriate to directing Crown Estate Scotland’s business in accordance with recognised good practice in corporate governance;
• ensuring that the work of the Board is subject to regular self-assessment and that the Board is working effectively;
• assessing the performance of individual Members on a continuous basis and undertaking a formal appraisal at least annually.
• in consultation with the Board as a whole, undertake an annual appraisal of the Chief Executive.
• Communications between the Board and the Scottish Ministers shall normally be through the Chair and Sponsor Team. The Chair shall ensure that other Members are kept informed of such communications.

3.7 Crown Estate Scotland - Role of the Board

Members of Crown Estate Scotland are appointed by the Scottish Ministers in accordance with article 5 the 2017 Order and in line with the Code of Practice for Ministerial Appointments to Public Bodies in Scotland, as issued by the Commissioner for Ethical Standards in Public Life in Scotland. The Members constitute the Board of Crown Estate Scotland.

The Board has corporate responsibility for ensuring that Crown Estate Scotland fulfils the aim and objectives set by the Scottish Ministers.

To this end, and in pursuit of its wider corporate responsibilities, the Board shall:

• establish the overall strategic direction of Crown Estate Scotland within the policy, planning and resources framework determined by the Scottish Ministers;
• agree the Annual Report and Corporate Plan, and approve the Business Plan;
• ensure that any statutory or administrative requirements for the use of public funds (i.e. all funds falling within the stewardship of Crown Estate Scotland) are complied with;
• operate within the limits of its statutory authority and any delegated authority agreed with the Sponsor Team, and in accordance with any other conditions relating to the use of public funds; and that, in reaching decisions, the Board takes into account relevant guidance issued by the Scottish Ministers;
• ensure statutory compliance in reaching decisions in relation to the management of the Scottish Crown Estate assets;
• regularly scrutinise current and projected performance against the aims, objectives and targets set out in plans and take decisions on remedial action where required;
• ensure that effective governance is established and maintained, including ensuring that decision-taking is open and transparent and, with support from the Accountable Officer and the Audit and Risk Committee, ensure that key risks are identified and managed;
• promote the efficient, economic and effective use of resources consistent with the principles of Best Value, and regularly scrutinise financial performance and compliance with financial guidance issued by the Scottish Government;
• promote the wellbeing, learning and development of staff, provide support and challenge to the Chief Executive on staffing matters and ensure that Crown Estate Scotland meets the staff management responsibilities described in the section below.
• Further guidance on how the Board should discharge its duties will be provided in appointment letters and in On Board - A Guide for Members of Statutory Boards. Individual Members shall comply at all times with Crown Estate Scotland’s Code of Conduct and with the rules relating to the use of public funds and conflicts of interest.

3.8 Crown Estate Scotland Chief Executive

Crown Estate Scotland is to have, as a member of staff, a Chief Executive appointed in accordance with article 9 of the 2017 Order.

• The Chief Executive is responsible for safeguarding the public funds (i.e. all funds falling within the stewardship of Crown Estate Scotland) for which the Chief Executive has charge; for ensuring propriety and regularity in the handling of those public funds; and for the day-to-day operations and management of Crown Estate Scotland. The Chief Executive should operate in a way which is in accordance with the terms of this Framework Document and within the terms of guidance in the Scottish Public Finance Manual (SPFM) and other instructions and guidance issued by the Scottish Ministers.
• The Chief Executive should maintain an awareness of the political environment in which Crown Estate Scotland is operating with a particular focus on ensuring any legislative changes which could impact upon Crown Estate Scotland are addressed, and provide input into legislative proCrown Estate Scotlandses as required.
• The Chief Executive has a duty to secure Best Value, which includes good corporate governance, performance management and continuous improvement. Guidance on what organisations should be able to demonstrate in fulfilment of these duties is included in the Best Value section of the SPFM.
• The Chief Executive will lead and manage the staff of Crown Estate Scotland ensuring their wellbeing, learning and development are prioritised.

The Chief Executive shall exercise the following specific responsibilities on planning, performance management and monitoring:

• Implement Crown Estate Scotland's Corporate Plan and Business Plans taking due account of the Scottish Ministers’ aims, objectives and plans;
• Establish a robust performance management framework which supports the achievement of Crown Estate Scotland's aims and objectives as set out in the Corporate Plan; and which enable full performance reporting to the Board, the Sponsor Team and the wider public;
• Ensure effective relationships with Scottish Government officials;
• Inform the Sponsor Team of Crown Estate Scotland's progress in helping to achieve the Scottish Ministers’ policy objectives and in demonstrating how resources are being used to achieve those objectives;
• Ensure that timely forecasts and monitoring information on performance and finance are provided to the Sponsor Team; that the Sponsor Team is notified promptly if overspends/under spends are likely or if performance targets are at risk, along with detail of mitigating/corrective action taken and that any significant problems, whether financial or otherwise, and whether detected by internal audit or by other means, are notified to the Sponsor Team in a timely fashion.

on advising the Board -

• advise the Board on the discharge of its responsibilities as set out in this document and in any other relevant instructions and guidance issued by the Scottish Ministers/Sponsor Team;
• advise the Board on Crown Estate Scotland's performance compared with its aims, objectives and priorities;
• ensure that financial considerations are taken fully into account by the Board at all stages in reaching and executing its decisions, and that standard financial appraisal techniques as set out in the Appraisal and Evaluation section of the SPFM are followed as far as this is appropriate and practical;
• take action and inform the Sponsor Team/Portfolio Accountable Officer immediately, if the Board, or the Chair, are contemplating a course of action involving a transaction which the Chief Executive considers would infringe the requirements of propriety or regularity or does not represent prudent or economical administration or efficiency or effectiveness;
• inform the Sponsor Team/Portfolio Accountable Officer immediately, if the Board, or the Chair, are contemplating taking an action which would not be in accordance with this Framework Document and/or within the limits of the duties under the 2017 Order or the 2019 Act.

on managing risk and resources

• ensure that a system of Risk Management section of the SPFM is embedded in the organisation to inform decisions on financial and operational planning and to assist in achieving objectives and targets;
• ensuring that Crown Estate Scotland adheres, where appropriate, to the Scottish Government’s Programme and Project Management (PPM) Principles;
• ensure that the funds falling within the stewardship of Crown Estate Scotland are used for the purpose intended, and that such monies, together with Crown Estate Scotland’s assets, equipment and staff, are used economically, efficiently and effectively;
• ensure that adequate internal management and financial controls are maintained by Crown Estate Scotland, including effective measures against fraud and theft as per the Fraud section of the SPFM;
• maintain a comprehensive system of internal delegated authorities which are notified to all staff, together with a system for regularly reviewing compliance with these delegations;
• ensure that effective HR management policies are maintained, and that strategic HR planning is linked to Crown Estate Scotland's objectives;
• establishing appropriate documented internal delegated authority arrangements consistent with the Delegated Authority section of the SPFM.
• ensure that the management of health and safety meets all regulatory and legislative requirements under the Health & Safety at Work etc Act 1974 and other relevant legislation.

on accounting for Crown Estate Scotland's activities:

• sign a Governance Statement regarding Crown Estate Scotland's system of internal control, for inclusion in the Annual Report and Accounts as per the Governance Statement section of the SPFM;
• ensure that an effective complaints procedure is in place and made widely known;
• give evidence when summoned before the Scottish Parliament on the use and stewardship of public funds by Crown Estate Scotland.
• The Chief Executive may delegate the day-to-day administration of his/her responsibilities to other employees in Crown Estate Scotland. However, he/she shall not assign absolutely to any other person any of the responsibilities set out in this Framework Document.

3.9 The Accountable Officer

The Principal Accountable Officer for the Scottish Administration designates the Chief Executive of Crown Estate Scotland as the Accountable Officer. Withdrawal of the Accountable Officer designation would also be a matter for the Principal Accountable Officer. The responsibilities of an Accountable Officer are set out in detail in the Memorandum to Accountable Officers in SPFM. The Accountable Officer is supported in this role by Crown Estate Scotland’s Audit and Risk Committee.

In particular the Accountable Officer shall:

• ensure the propriety and regularity of Crown Estate Scotland’s finances and that there are sound and effective arrangements for internal control and risk management.
• ensure that the resources of the public body are used economically, efficiently and effectively, and that arrangements are in place to secure Best Value for the organisation and to deliver Value for Money for the public sector as a whole.
• ensure compliance with relevant guidance issued by the Scottish Ministers, in particular the SPFM.
• sign the annual accounts and associated governance statements.
• Where the Accountable Officer considers that any action they are required to take is not consistent with their Accountable Officer responsibilities, they must obtain written authority from the Board and send a copy of the written authority to the Auditor General for Scotland (AGS) as soon as possible and sent to the Clerk of the Public Audit Committee. The Accountable Officer should consult the Portfolio Accountable Officer before seeking written authority from the Board in these circumstances and should always notify the Portfolio Accountable Officer when such a written authority has been issued..