Publication - Independent report

Supporting impact - Scottish Crown Estate net revenue: local authority use and insights

Net Revenues from the Scottish Crown Estate have been distributed to coastal Local Authorities for the benefit of coastal communities since 2019. This study was commissioned as part of the review process for the first two rounds of distribution of Scottish Crown Estate net revenues.

Supporting impact - Scottish Crown Estate net revenue: local authority use and insights
Findings

Findings

Through desk-based research and interviews with the largest net revenue Local Authority recipients, we identified the use of the revenues in the first two rounds. A table summary of the mid-tier recipients (£40k - £200k per annum) of net revenues is provided in Annex 4, and more detailed summaries of the high-tier recipients (£200k+ per annum) is in Annex 5. The lowest tier recipients had limited information available and de minimis recipients were not expected to report the use of their net revenues. Further detail of the first round of net revenue funding is available in Enclosure 1.

As previously stated, our research was focused on the five priority research areas of: Local Authority approach and the priorities/outcomes; risk and innovation; community engagement and voice; measuring impact and transparency and accountability. Below, we explore the common themes arising from the research and interviews.

Approach and priorities

Local Authorities had all taken an individual approach towards the use and distribution of the funds, but common themes emerged from the interviews. The flexibility of net revenue funding has allowed the development of place specific approaches including how coastal communities have been defined and identified.

Definitions of "Coastal Community"

There was considerable variation in the way "coastal community" has been interpreted. Some have adopted definitions ("within 5 km of the coast") whereas others, like the Island Councils, have assumed all areas are in scope owing to the close proximity to and interaction with the coast for their entire population. Others have used existing administrative boundaries (e.g. "only coastal wards are eligible") whilst others have looked at projects individually. A minority had been challenged on their interpretation of "coastal community", but clarification for the second round addressed those concerns.

The majority of Local Authorities noted their interest in how others had addressed this aspect of the net revenues, and a minority noted that clarification on the definition would be useful.

Strategic integration

All the Local Authorities interviewed had aligned their approach to the use of net revenues to their strategic plan and associated priorities. For the majority, this positioning was presented to the full Council, along with a series of recommendations, and signed off.

Beyond the alignment to the Local Authority plan there was only limited evidence of net revenue use linking to or developing more place-specific integrated long term plans like adaptive shoreline management, regional marine planning or integrated coastal zone management. The development and use of these plans would help to unlock longer term strategic impact and nurture larger scale impact for the communities over longer time frames. There is also the opportunity to use a strategic approach of this nature to systematically embed an approach that encourages innovation and secures larger scale collective impact.

Central or Community decision-making

Every Local Authority wrestled with the choice of central- or community- led decision-making. In practical terms, this is the key decision in determining the approach, and the choice was rooted in the balance of priorities for the Council at the specific point in time. The choice was not as polarizing as it may at first appear. While the start points differ, the management tools available to support implementation helped to define a rich and varied spectrum of approaches in between. Engagement with communities is explored further in the Community engagement and capacity building section.

This challenge is the aspect of net revenue approach that sees the greatest levels of variation between Local Authorities, with each seeking to respond to the needs and opportunities particular to their place. Some have adopted a centralized decision-making approach, drawing on previously identified strategic issues and making fewer, larger investments. Others, like The Highland Council and Comhairle nan Eilean Siar, have adopted a distributed model supporting Area Committees or communities to assess and distribute the funds themselves. Other future considerations include the possibility of developing a participatory budgeting approach.

The recipients of the two largest net revenues allocations adopted a blended approach, with part of the monies allocated to strategic projects and the other allocated to areas/community led distribution and decision making. The group of Local Authorities receiving mid-tier allocations of £40k - £200k were constrained as the relatively small level of revenue available was not able to effectively cover more than one approach.

"Through other schemes, smaller communities can often get outvoted. If the decision is made through the Council, projects that don't always benefit the most people but resolve issues that heavily impact smaller communities can be effected"

Outcomes

For the main part, socio-economic projects and outcomes have been supported (see Figure 1). This reflects the links all approaches have made to the overall aims and focus of their Local Authority strategy or plan, and to community needs. This focus has been reinforced in light of COVID-19, and the need for communities and local economies to respond and now recover.

Many have also noted a priority for the environment and a transition toward net zero. This has featured in different ways across the Local Authority approaches, with some noting these aspects as top level priorities and allocating the responsibility of the fund to a team in their environment work stream, others by adding climate change and environment team members to the internal decision-making group, and others still embedding expectations to tackle climate change or benefit the environment into the criteria of their fund.

"The flexibility of the fund offers a real opportunity to enhance Green Recovery and Biodiversity through funding key projects."

Timing and pipeline

The direction to use the funds within the financial year saw a mixture of responses. Those responding most firmly focused heavily on their existing project pipeline to facilitate quick expenditure and address strategic challenges. Others choose to prioritise the involvement of the community in the process, accepting the risk that this would take longer but would result in deeper engagement and nurturing a longer-term pipeline of potential projects. The total pipeline of projects across the Local Authorities is limited and greater investment in the development of the pipeline will be needed to ensure the quality of projects and impacts remains high.

The pandemic has had an impact on all Local Authority timelines across both rounds of the fund. The majority of councils responded to the pandemic by adjusting the parameters of their approach, and building on existing socio-economic strands. A minority shifted their approach more fundamentally, including pooling these funds with other monies to make a COVID-19 response fund and, in one case, supplementing business grants directly by a further 10%. The response to COVID-19 is now shifting to (green) recovery, and we expect will be part of the broader considerations influencing approaches to the use of net revenues from round three.

"A longer-term commitment of the allocations would be welcomed, even if this is to a minimum grant size"

Risk and Innovation

Risk was considered by all the Local Authorities interviewed. Most approaches adopted by Local Authorities turned to the communities to develop the pipeline of potential projects through a bidding process. The risk appetite and management processes have therefore been established as a byproduct of the criteria and administration associated with this approach.

These have predominantly been built on well-established processes of existing or recently used funds – "like LEADER[2], but with less red tape". This has also helped to ensure that each Local Authority achieves the levels of accountability expected by Scottish Ministers. The outcome is that the risk appetite for use of the net revenues and supporting risk management processes are very similar to numerous other activities Local Authorities run, which may limit innovation or high risk activities.

Despite this structural observation, we have noted a number of examples where risk/innovation has been explored further, with one of the largest recipients of revenues actively seeking to "de-risk" the prospect of investing in communities by addressing "drag factors" that currently limit the prospect of securing private funds. This has included a focus on flood mitigation, seawall improvements and coastal roads and other activities "that make towns and communities more investable".

"For the First Year of Funding, the projects identified were those that needed to be delivered but didn't already have a budget. As those prioritized projects are fulfilled, more ambitious projects may be considered and realized with the future allocations."

Community engagement and capacity building

The intended use of net revenues are for coastal community benefit, and it is therefore appropriate to see community voice and community engagement feature across all the Local Authority approaches.

As noted earlier, some Local Authorities opted to be led directly by the communities in terms of distribution. This was mainly achieved through setting up a fund to distribute directly to communities. This was either managed by Area Committees or similar community-based structures who finalised the criteria and made the awards.

For those that adopted a central-led approach to distribution, it was recognised there was a need to meaningfully engage or respond to communities at a different point of the process. Some identified that previous community engagement, such as with the Local Development Plan, had highlighted areas of interest or key issues to be addressed, and therefore the revenues could be directed towards these already identified priorities. Aberdeenshire Council conducted a survey of their community in order to explore new priorities for the revenues. Others used existing contacts within the community such as local Councilors or community-based staff to bring in the community voice to their decision-making.

The development of community capacity or capability building (and now sometimes referred to as community confidence building) featured in a mixture of ways across all Local Authority approaches. For many that was a product of the applications that were successful, for others it was a more intrinsic element of the approach. One notable example was the Comhairle nan Eilean Siar who "top-sliced" the revenues to allow a one-off investment in the capabilities of community partnership boards, to equip them to support longer term distribution of monies and projects in their areas.

A further point to note is that some Local Authorities used the process itself to develop community capability too. For example, The Highland Council developed an in-house approach to working with applicants, including mentoring, support and feedback to help applicants to improve the current application and to be "better placed to deliver their next project". This not only helped to ensure the "best" projects get support as the application does justice to the opportunity, but also develops longer term capability which will help to unlock longer term benefit and impact.

"Community managers work closely with the local outcome improvement plan, local community plan and Community Asset Transfers and as such have a clear oversight of communities, who they are and what groups are active and the developing eligible projects for these types of activities."

Impact and measurement

All Local Authorities had considered and intend to assess impact, but this is very early in the process to be able to judge the success of various approaches.

For most Local Authorities, the approach to impact measurement is embedded in the broader methods for tracking and monitoring high-level outcomes of the Local Authority Plan or similar. This would therefore be assessed within the monitoring framework of that plan and may only give a proxy measure of success and may not be able to attribute an impact to a specific intervention supported by net revenues.

In addition to this high-level consideration, there are specific outcomes associated with each project. As the projects mature these measures will provide greater insight into the impact of each investment.

"Presently, projects are reviewed on how each priority of the partnership plan has been delivered against. In the future, we may look to implement 'Post-Project Monitoring,' however, we recognize that not all projects can be measured with metrics but rather by enhancement or community confidence."

Transparency and accountability

There are a mixture of approaches across different Local Authorities to transparency and accountability. This is essential, as each Council is accountable directly to the Scottish Parliament for their use of net revenues.

Most Local Authorities have used existing systems and procedures, including decision making and reporting through established forums – i.e. the full Council or designated committees, current schemes of delegation, and the use of the Council website.

Most information was available in the public domain across all tiers (see summaries in Annex 3, 4 and 5), but some of this was difficult to find with decision making taking place at different levels and with committees across Local Authorities having different names. This was complicated further when the information was associated with other commercially sensitive information and therefore not reported openly.


Contact

Email: CESU@gov.scot