SCEB027 1 Environment, Climate Change And

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Environment, Climate Change and Land Reform Committee

Written submission from Comhairle nan Eilean Siar (Local Authority for the Western Isles / Outer Hebrides)

Does the Bill allow Crown Estate Scotland, or a delegated Manager, to appropriately manage the Scottish assets?

1 Comhairle nan Eilean Siar would have preferred it if the Bill had devolved administration to interested Local Authorities, in line with Smith Commission recommendations, rather than simply introduce a methodology for devolution. Having said that, the provisions of the Bill should allow a delegated Manager, such as a Scottish Island Local Authority, to manage Crown Estate assets. 2 Comhairle nan Eilean Siar has consistently urged that the Bill should become an opportunity to add value to Crown Estate assets from the community perspective. In particular, the historic ‘commercial return with good management’ requirement on Crown Estate assets should now be developed into maximising the return from these assets while contributing to wider socioeconomic objectives. It is gratifying to see that the Bill embraces this principle but the principle can only be effective, in the community context, if host communities are permitted to retain 100% of net revenues from local leases. 3 In determining where management of assets is to be transferred or delegated, Ministers should be mindful of the existing capacity of Local Authorities to deal with consents, licensing, legal and financial issues, socioeconomic benefit negotiation, revenue generation and disbursement. In addition, the statutory requirements already placed on the Local Authority, with regard to community empowerment, equalities, Best Value etc render Local Authorities well placed for devolved management. It is suggested that it would be beneficial if any devolved manager operated on a similar basis. Are the powers to allow the transfer of the management function appropriate? 4 Again, the Comhairle had hoped that the Bill would effect transfer of administration and not just enable future transfer. The Comhairle notes that Scottish Ministers will apply three principles when considering the best approach for future management of assets and the first of these is accountability. It will be important that any body chosen to manage assets is fully accountable. Local Authorities have the capacity and democratic credentials to efficiently and effectively manage the full range of transferred assets. Local authorities have teams in place e.g. a Legal team, a Financial team, an Economic Development team, a Marine Planning team. It is suggested that capacity would require to be built in any community organisation seeking to take over management and that it would be necessary to ensure that it represented and was accountable to the relevant community.

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Another management option would be for the ‘Tier 1’ Manager to be the Local Authority. The Comhairle would be keen to have the opportunity to work with individual community organisations in relation the management of assets in their immediate area on an agency basis. Through a Memorandum of Understanding between the Comhairle and individual community organisations, these community organisations could manage their Crown Estate assets on an agency basis, retaining community level control while taking advantage of the Comhairle’s legal, financial and negotiating structures, all within the context of existing accountability arrangements. This arrangement would offer value for money for the local community and wider Crown Estate. Further clarity is sought on the circumstances in which a direction from Scottish Ministers would be issued under section 4. . 5 Given the complexity of the Local Authority’s current work and its track record, it is anticipated that Local Authorities would be well placed to make a case for transfer of management. More detail would be appreciated on the DELEGATION option, where a relationship is maintained between Crown Estate Scotland and the delegate, and the TRANSFER option where management is fully transferred to the transferee. There may be a case for Crown Estate Scotland staff to be devolved to the communities where the bulk of assets are being managed and this would help achieve wider community objectives on population retention, demographic balance etc. Are the Manager’s powers and duties, as listed in the Bill, appropriate? 6 The Comhairle is broadly happy with the proposed powers and duties for the Manager, particularly the requirement that management of the assets will have to achieve wider socioeconomic benefits. Local Authorities have experience where base investment is often leveraged by a factor of three or four to deliver a far wider range of benefits than initially envisaged. 7 It should be noted that the assets being managed are public assets and their management should be open to public scrutiny against equalities legislation, Best Value requirements, performance, sustainability and economic impact indicators. The Fairer Scotland duty which will come into force on 1 April 2018 will also strengthen the focus of local authorities on socio economic considerations. Local Authorities are well placed to deliver on all these requirements and it is suggested that all community managers should operate within a similar framework. 8 The Comhairle is puzzled by the management options presented in the 2017 Scottish Government consultation. As it stands, the assets offered to Local Authorities / communities are: Foreshore Rights; Wave and Tidal Leases out to 1nm, 3nm or 12nm; Land in Local Authority operated Ports; and, Non- Operational Ports and Jetties. Meanwhile, Offshore Wind leases out to 12nm and Aquaculture are reserved “for further consideration”. 9 The commercial Tidal Energy resource in the Western Isles is negligible and commercial Wave Energy in the seas around the Western Isles is at least ten years away. Transferring leasing powers for Tidal and Wave Energy deployment

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will therefore make no difference to the current situation in the Western Isles until 2030. The real, tangible marine industries of scale in the Western Isles, now and in the very short term, are Aquaculture and Offshore Wind and lease management responsibility for both these must be transferred to the island Local Authorities. The Comhairle has been deeply engaged with Aquaculture developers for decades, maximising the socioeconomic return from this industry for the fragile island communities who host it. Similarly, over the past four years, the Comhairle has been deeply engaged with an Offshore Wind developer with regard to deployment around the Western Isles. If it happens, this deployment will be transformational for the island economy and will encompass cutting edge innovations like island scale battery storage and facilitation of the UK’s first true Local Energy Economy. All this has been negotiated by the Comhairle rather than the Scottish Government/ Crown Estate Scotland and the management of leasing and revenues for Offshore Wind deployments should therefore remain with the Local Authority. At the same time, it is recognised that massed Floating Offshore Wind deployments beyond 12nm are National Interest in scale and should, perhaps, be managed nationally with a proportion of revenue returning to the associated Local Authority area. 10 The Comhairle has consistently sought the transfer of asset management to interested Local Authorities for: Foreshore Rights; Aquaculture; Offshore Wind Leasing out to 12nm; Wave and Tidal Leasing out to 12nm; and, Local Authority Operated Ports. The Marine Licensing Pilot currently underway will involve island Local Authorities at this level of deployment and, at a time when the islands, supported by both Governments, are seeking new powers of self- determination through the Islands Bill and Islands Deal, it makes no sense to remove management of Aquaculture and inshore Renewable Energy development from these Local Authorities. Should any additional power or function of the Scottish Crown Estate, not currently provided for in the Bill, be included? 11 The powers or functions of the Scottish Crown Estate provided for in the Bill are sufficient but the question is what level these powers and functions are transferred to and which powers and functions are retained nationally. 12 The Comhairle has always contended that the Local Authority is a credible and secure destination for Crown Estate powers and functions. The Comhairle is committed to working with local community landowners through Memoranda of Understanding and other mechanisms to ensure that real benefits are delivered to those communities who have the ambition to develop their Marine Estate as well as with any community body which takes over management in its own right. 13 The Comhairle believes it is vitally important that management of the following assets is transferred to local management, ideally by the relevant Local Authority:  Foreshore Rights;  Aquaculture;  Offshore Wind Leasing, including Floating Offshore Wind, out to 12nm;

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 Wave and Tidal Leasing out to 12nm; and,  Local Authority Operated Ports.

14 This raises the question of accruing revenue from deployments in relation to these assets. The Comhairle has long held that the historic Crown Estate model of local deployment and expatriation of all revenues to HM Treasury was inequitable and unfair. This inequity was, in large part, the driver behind the reform movement which resulted in the Smith Commission Report and the current Crown Estate Bill. No manager should be expected to assume management responsibilities for Crown Estate assets without access to 100% of the net revenues from these assets. The whole point of involvement in this debate for the Comhairle is the retention of revenues, raised from local assets, in the fragile communities who host Marine Estate deployments. 15 The Comhairle is concerned that the Civil List Act 1952, as amended, with its provision that revenues accruing from transferred property, rights and interests shall be paid into the Scottish Consolidated Fund, will be used to ensure continued expatriation of asset revenues, even where these assets are locally managed. Expatriation of net revenues from host areas or communities could not be supported by the Comhairle. 16 Accepting the Civil List Act 1952 requirement that 91% of asset revenues must be paid into the Scottish Consolidated Fund, there should be a formal protocol to ensure that these net revenues be returned in full to the areas or communities hosting revenue generating deployments. It is noted with concern that, although 9% of asset revenues can be retained locally as things stand, even this small amount must be reinvested in Crown Estate assets. This is considered to be too prescriptive to promote wider socio-economic development. 17 The Comhairle would highlight the First Minister’s statement in 2015 that, “coastal and island Councils will benefit from 100% of the net revenue generated in their area from activities within 12nm of the shore”. This statement aligns perfectly with the Comhairle’s expectation and the Committee is urged to honour this commitment by introducing a formal mechanism for all net revenues to be returned from the SCF to the Local Authority area hosting the revenue generating deployments. 18 The Comhairle is concerned about the Bill’s provision for cross-subsidy and the removal of local decision making in this regard. The provision for Scottish Ministers to direct payments from revenue generating assets to non revenue generating assets could undermine the viability of the former and these transactions would be outwith the control of the local Manager seeking to maximise local benefit and value from money from the revenue generating asset. More detail on this provision would be appreciated. 19 There is a requirement to know exactly what the liabilities associated with any particular asset are. Where the manager, such as a Local Authority, is also a consenting Authority it will already have a liability risk against a development should the developer renege on any obligations set out in their consent for

SCEB027 whatever reason. To some extent this will be depend on the location of the infrastructure – beyond 12nm it should be managed nationally and within 12nm it would be locally managed (and in some instances there could be joint responsibility) to reflect the level of devolution. Something similar to s75 Planning obligations could be introduced so that a developer accepts their responsibility up front. The Comhairle notes that 74% of respondents to the 2017 consultation were of the view that the costs associated with management of liabilities should be included in the overheads for estate management but the Bill is not clear on this point.

Lesley McDonald Head of Executive Office