House of Commons Scottish Affairs Committee The Crown Estate in Scotland Seventh Report of Session 2010–12 Report, together with formal minutes, oral and written evidence Ordered by the House of Commons to be printed 7 March 2012 HC 1117 Published on 19 March 2012 by authority of the House of Commons London: The Stationery Office Limited £24.50 The Scottish Affairs Committee The Scottish Affairs Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Scotland Office (including (i) relations with the Scottish Parliament and (ii) administration and expenditure of the offices of the Advocate General for Scotland (but excluding individual cases and advice given within government by the Advocate General)). Current membership Mr Ian Davidson MP (Labour/Co-op, Glasgow South West) (Chair) Fiona Bruce MP (Conservative, Congleton) Mike Freer MP (Conservative, Finchley and Golders Green) Jim McGovern MP (Labour, Dundee West) Iain McKenzie MP (Labour, Inverclyde) David Mowat MP (Conservative, Warrington South) Pamela Nash MP (Labour, Airdrie and Shotts) Simon Reevell MP (Conservative, Dewsbury) Mr Alan Reid MP (Liberal Democrat, Argyll and Bute) Lindsay Roy MP (Labour, Glenrothes) Dr Eilidh Whiteford MP (Scottish National Party, Banff and Buchan) The following members were also members of the committee during the parliament: Cathy Jamieson MP (Labour/Co-op, Kilmarnock and Loudoun) Mark Menzies MP (Conservative, Fylde) Graeme Morrice MP (Labour, Livingston) Fiona O’Donnell MP (Labour, East Lothian) Julian Smith MP (Conservative, Skipton and Ripon) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/scotaffcom. A list of Reports of the Committee in the present Parliament is at the back of this volume. The Reports of the Committee, the formal minutes relating to that report, oral evidence taken and some or all written evidence are available in a printed volume. Additional written evidence may be published on the internet only. Committee staff The current staff of the Committee are Dr Rebecca Davies (Clerk), Duma Langton (Inquiry Manager), James Bowman (Senior Committee Assistant), Gabrielle Hill (Committee Assistant) and Ravi Abhayaratne (Committee Support Assistant). Contacts All correspondence should be addressed to the Clerk of the Scottish Affairs Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 6123; the Committee’s email address is [email protected] The Crown Estate in Scotland 1 Contents Report Page Summary 3 1 Introduction 5 Background 5 Our inquiry 5 2 Composition, accountability and finances 8 Composition 8 Accountability 11 Finance 15 Scottish finances 16 Net profits 17 Marine renewables 18 3 Relationships and communication 21 Communication and engagement 21 Community benefits and the public interest 25 4 The need for reform 29 Two-phase decentralisation 29 Transition 31 Financial implications 32 5 Marine rights 35 Crown foreshore 35 Harbours 36 Seabed rights 38 Ownership 40 Administration 41 Revenues 43 6 Other rights 49 Other ancient possessions 49 Historic sites 49 Ancient rights 50 Oysters and mussels 50 Salmon fishing 50 Gold and silver 51 Modern acquisitions 51 Existing management 51 Rural estates 52 Future options 54 7 Conclusion: the way ahead 56 2 The Crown Estate in Scotland Conclusions and recommendations 58 Formal Minutes 64 Witnesses 65 List of printed written evidence 66 List of organisations visited 67 List of Reports from the Committee during the current Parliament 68 The Crown Estate in Scotland 3 Summary This report examines the Crown Estate Commissioner’s (CEC’s) management of the Crown property, rights and interests which make up the Crown Estate in Scotland. We note that the management of these rights is a very small part of the CEC’s UK operations at only 3% of both value and revenue. Marine operations are by far the largest component of the CEC’s responsibilities in Scotland, compared to the current dominance of urban property in the rest of the UK. The CEC’s operations in Scotland can be split into two categories: ancient possessions/responsibilities and modern activities relating to the buying, selling and management of property and land. The evidence identified major issues over the CEC’s management of its responsibilities, particularly in relation to the seabed and the foreshore: including the lack of accountability, the lack of communication and consultation with local communities, the inappropriateness of the CEC’s statutory remit for its responsibilities in the marine environment, the cash leakage from local economies and other adverse impacts arising from the way the CEC operates, together with the limited benefits in Scotland from the CEC’s involvements. We identified no such problems with the CEC’s management of its urban and rural estate. We conclude that the only way in which to address these fundamental issues is that the CEC’s responsibilities for the administration and revenues of the ancient Crown property, rights and interests in Scotland be ended. However, centralising these responsibilities in Edinburgh would be insufficient and would not address the fundamental problems identified. The CEC’s responsibilities for the seabed, the foreshore and other ancient rights in Scotland should therefore be devolved then decentralised as far as possible. Devolution to Holyrood should be conditional upon an agreement between the Secretary of State for Scotland and the Scottish Government on how such a scheme of subsidiarity to local authority and local community levels should be implemented. We recommend the CEC continue to operate as a commercial developer on a UK wide basis. In the second part of the report, we set out how different arrangements could be made for each of the Scottish Crown property rights and responsibilities. Further consultation is required, but should proceed on the basis of the proposals set out by the Highlands and Islands local authorities, which provides a clear framework on which to base discussion about future arrangements. The Crown Estate in Scotland 5 1 Introduction Background 1. The Crown Estate consists of the Crown property, rights and interests managed by the Crown Estate Commissioners (CEC) on behalf of the Crown. The CEC is a public body first constituted in 1956 and now governed by the terms of the Crown Estate Act 1961. The CEC operates under a commercial remit and all surplus revenues are transferred to the UK Treasury for use as part of government expenditure. 2. The Crown property, rights and interest administered by the CEC in Scotland are different from those in the rest of the UK, as they are defined by Scotland’s property law and are rights that belong to the Crown under its distinct legal and constitutional identity in Scotland. For the most part, responsibility for Scotland’s Crown property rights is devolved to the Scottish Parliament. These rights are managed by the Scottish Government with the exception of those which are still managed by the CEC in London as part of the Crown Estate. The latter include the Crown’s ownership of Scotland’s territorial seabed and around 50% of Scotland’s foreshore.1 While the CEC is formally accountable to the Treasury, the Secretary of State for Scotland is the Minister with lead responsibility for the CEC’s operations in Scotland. 3. Over recent years, there has been a significant increase in the potential for the development of marine renewable energy projects in the coastal waters around Scotland.2 Indeed, the CEC has forecast that the revenues from Scotland (raised from leasing areas of seabed) from such developments are set to be somewhere between £12 and £49 million by 2020.3 As the rights to the seabed are administered by the CEC, these revenues will go directly to the UK Treasury.4 Furthermore, while most responsibilities for marine planning and development are devolved to the Scottish Parliament and Government, the CEC is not formally accountable to either institution in any way. Our inquiry 4. In January 2011, we launched our inquiry into the Scotland Bill, with a view to focusing on the main provisions in the Bill for increased tax raising and borrowing powers for the Scottish Parliament.5 Clause 18 of the Bill makes a relatively minor provision for the statutory appointment of a Scottish Commissioner to the Board of the CEC.6 The Committee was therefore surprised both by the volume of submissions to that inquiry, 1 For a full list of Scottish rights managed by the CEC see page 10 of this report. 2 For a broader discussion of the development of marine renewable in the UK, see the House of Commons, Energy and Climate Change Committee report, The Future of marine renewable in the UK, Eleventh Report of Session 2010– 12, HC 1624, 19 February 2012. 3 Ev 126. See table 2 on page 18 of this report. 4 In July 2011, the Government announced a Coastal Community Fund grant scheme, which will be financed by the Treasury each year with an amount equivalent to 50% of the CEC's marine revenues. This is considered in greater detail in paras 148-153 of this report. 5 Scottish Affairs Committee, The Scotland Bill, Fourth Report of Session 2010–11, HC 775, 21 March 2011 6 Strengthening Scotland’s Future, Cm 7973, 30 November 2010 6 The Crown Estate in Scotland which specifically related to the CEC’s operations in Scotland, and by the strength of criticism of the CEC expressed in those submissions: not least that the CEC is an anachronistic institution in a devolved Scotland, with insensitive and unaccountable working practices which do not serve the best interests of the people of Scotland and Scottish communities.