SUSTAINABLE DEVELOPMENT COMMITTEE 16 JUNE 2021

CROWN ESTATE LOCAL ASSET MANAGEMENT PILOT

Joint Report by Chief Executive and Director for Communities

PURPOSE

1.1 To seek authorisation to progress the Scotland Local Asset Management Pilot into phased implementation with a view to ultimate transfer of Asset Management powers.

EXECUTIVE SUMMARY

2.1 Prior to 2017, the Crown Estate awarded leases in Hebridean waters with no consultation with the host community and no regard to the capture of socioeconomic benefit for the community. Once these leases were activated, all lease revenues then flowed back to HM Treasury in London, leaking out of the communities most affected by Marine Estate deployments.

2.2 From the 1990’s, the Comhairle and its partners lobbied vigorously for these aspects of Crown Estate operation to be reformed so that host communities could become more empowered in the award of leases and so that an appropriate proportion of lease revenues could be retained in host communities. The breakthrough came in 2014 when the recommended that management of Crown Estate assets in Scotland should be devolved to the Scottish Ministers and onwards to any Local Authority area which requested asset management powers. The Smith Commission further recommended that all net Crown Estate revenues should return to coastal Local Authorities and this is now taking place with £4.0m in Crown Estate revenues already returned to the Comhairle.

2.3 The Smith Commission recommendations led to the establishment of Crown Estate Scotland through the Scotland Act of 2016 and the Scottish Crown Estate Act of 2019 introduced provisions for Crown Estate asset management powers to be transferred or delegated to any Local Authority or community organisation (as defined by the Act) seeking such powers.

2.4 To help prepare Local Authorities or community organisations to take on asset management powers, transferred or delegated, Crown Estate Scotland introduced the Local Asset Management Pilot programme in 2019. The Comhairle, in partnership with Galson Estate Trust, submitted a joint bid where Galson Estate Trust manages Renewable Energy leasing in the Estate’s sea area and the Comhairle manages all other leases throughout the Hebrides Marine Region.

2.5 Crown Estate Scotland and the Scottish Ministers have now approved the Outer Hebrides Asset Management Pilot for implementation. The operating model for the Pilot is outlined in the body of the report.

RECOMMENDATION

3.1 It is recommended that the Comhairle agree to the implementation of the Outer Hebrides Asset Management Pilot with a view to eventual transfer of Asset Management Powers under Part 2(3) of the Scottish Crown Estate Act 2019.

Contact Officer: John Cunningham, [email protected] Appendix: None Background Paper: Crown Estate Scotland Local Asset Management Pilot Partnership Agreement Report to Sustainable Development Committee 2 December 2021 IMPLICATIONS

4.1 The following implications are applicable in terms of the Report.

Resource Implications Implications/None Financial The Pilot will be fully funded by contributions from Crown Estate Scotland and . Legal The terms of the Pilot have been reviewed by the Comhairle’s Legal section. Staffing The Pilot will require new staff, recruited as Comhairle employees and fully funded through the contributions from Crown Estate Scotland and Marine Scotland. Assets and Property None Strategic Implications Implications/None Risk A detailed Risk Register has been developed for the Pilot, based on the Comhairle’s Risk Management template. Equalities None Corporate Strategy STRATEGIC THEME 1 – COMMUNITY AND PUBLIC SERVICES  empowered communities maximising the value of our natural, human and cultural resources, and empowered to support social and economic regeneration;  a place-based model of empowered local governance and delivery of public services, with increased democratic legitimacy and accountability; and,  progress the devolution of Crown Estate management and Regional Marine Planning responsibilities. Environmental Impact None Consultation Key stakeholders have already been engaged and consultation with existing tenants and the local community will be a key feature of the Pilot as it rolls out.

BACKGROUND

5.1 Starting in the 1990’s, the Comhairle and its partners argued against a Crown Estate system which saw seabed and foreshore leases issued without consultation with the communities hosting these deployments. The situation was exacerbated by a rental regime that saw all seabed and foreshore lease revenues return to HM Treasury in London, by-passing the fragile communities who had to suffer the disbenefits of these deployments.

5.2 Sustained lobbying led to the Comhairle giving evidence on Crown Estate reform before the House of Commons Scottish Affairs Select Committee and the Smith Commission which had been established to explore additional devolved powers for Scotland in the wake of the 2014 referendum on Scottish independence. The essence of the Comhairle’s ask was subsequently incorporated into the Smith Commission’s report when it stated, “Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the . Following this transfer, responsibility for the management of those assets will be further devolved to local authority areas such as , Shetland, Na h-Eilean Siar or other areas who seek such responsibilities”.

5.3 A UK Bill, based on the Smith Commission recommendations, became law as the Scotland Act in 2016 and, through the Act, the management and revenues of the Crown Estate in Scotland became the responsibility of a new body, Crown Estate Scotland. Crown Estate Scotland is now responsible for all seabed leases out to 12nm, the rights to Offshore Renewable Energy out to 200nm and half of Scotland’s foreshore including 5,800 moorings and some ports and harbours. Crown Estate Scotland is overseen by a Chief Executive who is directly accountable to the Scottish Ministers. PROVISION FOR TRANSFER OF ASSET MANAGEMENT FUNCTION

6.1 The Scottish Parliament subsequently passed the Scottish Crown Estate Act in 2019 and this legislation provides a pathway for the transfer of the Crown Estate asset management function to a Local Authority, a Harbour Authority or a community organisation as defined by the Act. There is separate provision within the Act for the ‘delegation’ of the management function, as opposed to its ‘transfer’, but the Comhairle has always been clear that it aspires to outright transfer of the management function from Crown Estate Scotland to the Local Authority.

LOCAL ASSET MANAGEMENT PILOT PROGRAMME

7.1 In 2019, Crown Estate Scotland introduced a Local Asset Management Pilot programme for organisations intending to pursue transfer or delegation of the asset management function. The then Cabinet Secretary for Environment, Climate and Land Reform indicated that any organisation seeking transfer or delegation of the management function would first have to successfully deliver a Local Asset Management Pilot.

7.2 On this basis, the Comhairle and Galson Estate Trust requested participation in the Local Asset Management Pilot programme and, over the course of 2020 and into 2021, the Pilot has been developed and refined to the point where it is now approved for implementation by Crown Estate Scotland and the Scottish Ministers.

7.3 Under the Outer Hebrides Local Asset Management Pilot, Galson Estate Trust will assume responsibility for all Renewable Energy leases in the Galson Estate sea area while the Comhairle will assume responsibility for all leases in the Hebrides Marine Region, except Renewable Energy Leases in the Galson Estate sea area.

7.4 There are close synergies with the acquisition of Regional Marine Planning powers and this will be the subject of a detailed report to the next Comhairle Committee series. The acquisition of Regional Marine Planning powers will require the establishment of a statutory Marine Planning Partnership comprising representatives of all those agencies active in the marine environment around the Outer Hebrides. The Crown Estate Local Asset Management Pilot presents the opportunity to pilot this partnership on a less formal, non-statutory, basis and so a cross-sector Outer Hebrides Marine Development Partnership (OHMDP) will be established to inform and guide the Local Asset Management Pilot process. Under the Pilot, the OHMDP will make a recommendation to the Outer Hebrides Marine Development Committee (OHMDC), a Committee of Elected Comhairle Members with a membership exclusive of the Planning Applications Board to avoid conflict of interest in areas such as Aquaculture consenting.

7.5 Historically, the local community has been excluded from Crown Estate decision making and, to address this shortcoming, the Pilot will deploy the ‘Community Impact Assessment’ where, in respect of every lease application received, the host community (the relevant community landowning estate where one exists or the local Community Council where there is no estate) will be invited to assess the proposal in terms of potential for start-up business, the capability of local infrastructure to support the development, visual impact etc.

7.6 When sufficient detail regarding a lease application is received, the Outer Hebrides Marine Development Partnership will be consulted and will come to a view on the suitability of the proposal in environmental and socio-economic terms. Concurrently, the host community will be invited to prepare a Community Impact Assessment outlining the benefits and disbenefits of the proposal at the micro-community level. These two assessments will be synthesised into a recommendation to the Outer Hebrides Marine Development Committee who will determine whether the lease should be granted or not. 7.7 The determination of the Outer Hebrides Marine Development Committee will then be transmitted to Crown Estate Scotland who, as the accountable body before Parliament, will carry out a Due Diligence check on the proposal before implementing the determination. Crown Estate Scotland will then manage any resulting lease through its lifetime.

7.8 This Pilot represents the first time in history that the potential socioeconomic benefits of a seabed or foreshore lease will be assessed by Hebridean marine interests and local views sought on what is proposed. It is considered that this approach represents a strong foundation for the subsequent transfer of full management powers to the Comhairle. The Pilot period, which could be between three and five years, will provide ample opportunity to stress test the framework in partnership with existing managers, Crown Estate Scotland.

RESOURCE IMPLICATIONS

8.1 Delivery of the Local Asset Management Pilot and the associated acquisition of Regional Marine Planning powers will require new resource. It is intended that these new workstreams will be delivered as a package; however, it is recognised that the Comhairle’s Development Planning and Development Management functions are currently operating at capacity due to a long term staff absence and wider pressures across the Planning service. Crown Estate Scotland has made available funding of £30,000 per year while Marine Scotland has made available funding of £65,000 per year going forward which will fund the new resource required. The development of a Regional Marine Plan for the Outer Hebrides will require a significant level of specialist consultancy over and above core staffing and, to facilitate this, a portion of returning Crown Estate revenues has been, and will be, retained. Both projects will therefore be cost neutral to the Comhairle.

8.2 A phased implementation of the Asset Management Pilot over a period of 6 to 12 months is envisaged. Over this period, Comhairle staff will work hand-in-hand with Crown Estate Scotland colleagues, familiarising themselves with Crown Estate Scotland systems. The Outer Hebrides Marine Development Partnership and Marine Development Committee will be established and the Community Impact Assessment will be trialled over this phased implementation period.

CONCLUSION

9.1 Sustained lobbying by the Comhairle and its partners has resulted in a Crown Estate regime that is more accountable and more responsive to the communities hosting seabed and foreshore leases. Responsibility for Crown Estate assets in Scotland has now moved from London based Crown Estate Commissioners to the Scottish Ministers and a new body, Crown Estate Scotland, is engaging effectively with Local Authorities and other stakeholders across Scotland.

9.2 The Comhairle has consistently called for the devolution of decision making around seabed and foreshore leases to the relevant Local Authority area and the return of net revenues from these leases to fragile host communities. The Scottish Crown Estate Act of 2019 provides for transfer or delegation of Crown Estate asset management powers to Local Authorities, Harbour Authorities or community organisations as defined by the Act. The Comhairle aspires to full transfer of asset management powers but, in order to achieve this, the Comhairle must first complete a Local Asset Management Pilot and authorisation to launch this Pilot, in partnership with Galson Estate Trust, is sought through this report.

9.3 Net revenues from Crown Estate leases are already flowing back to the Comhairle under a separate process with £4.0m returned over the past two financial years.