SUSTAINABLE DEVELOPMENT COMMITTEE 2 DECEMBER 2020 CROWN ESTATE SCOTLAND LOCAL ASSET MANAGEMENT PILOT Joint Report by Chief Executive and Director for Communities PURPOSE OF REPORT To seek authorisation for progression towards phased implementation of the Crown Estate Scotland Local Asset Management Pilot. COMPETENCE 1.1 There are no legal, financial, equalities or other constraints to the recommendations being implemented. Any staff resource required to administer the Pilot will be externally funded. SUMMARY 2.1 Historically, Crown Estate Commissioners based in London issued seabed leases around the UK with no consultation with the local community and all income from these leases returning to HM Treasury in London. The Comhairle was in the forefront of the campaign for change in the Crown Estate and these efforts led to the inclusion of management of Crown Estate assets in Scotland within the purview of the 2014 Smith Commission on additional devolved powers for Scotland. The Smith Commission recommended that management of Crown Estate assets in Scotland should be devolved to the Scottish Islands or other areas who seek such responsibility. The Comhairle has also long campaigned for Crown Estate revenues to return to the communities hosting marine deployments. 2.3 The Scotland Act 2016 and Crown Estate (Scotland) Act 2019 brought about radical change in the Crown Estate service. Crown Estate Scotland was formed, accountable to Scottish Ministers, and revenues began to flow back to host communities - £1.7m (2019/20) and £2.3m (2020/21) to the Comhairle alone. 2.4 The Crown Estate (Scotland) Act 2019 enabled local organisations to participate in a Crown Estate Scotland Local Asset Management Pilot Scheme, developing a much more substantial local involvement in decision making around seabed leasing. A joint proposal was submitted by the Comhairle and Galson Estate Trust (GET) to manage seabed assets around the Outer Hebrides. Under the proposal, consideration of leases will be informed by the view of a new Outer Hebrides Marine Development Partnership (comprising representatives of all organisations with an interest in the Hebridean marine sector) and by the outcome of a Community Impact Assessment carried out by the area Community Landowner or Community Council. Determination of leases will be made by a new Comhairle Outer Hebrides Marine Leasing Committee (populated by elected Members not on the Comhairle’s Planning Applications Board) or by elected GET Trustees as appropriate. 2.5 Crown Estate Scotland will carry out a Due Diligence check on these local determinations and any resource required to administer the Pilot will be provided by Crown Estate Scotland. Synergies with the acquisition of Regional Marine Planning powers, which will be the subject of a report to the February 2021 Committee series, are strong. RECOMMENDATIONS 3.1 It is recommended that the Comhairle: (a) approves participation in the Crown Estate Scotland’s Local Asset Management Pilot Scheme on the terms outlined in the Report; and (b) requests that the Chief Executive, in consultation with the Director for Communities, make appropriate arrangements to ensure that robust procedures and due diligence arrangements are put in place to regulate the Local Asset Management Pilot Scheme. Contact Officer: John Cunningham, [email protected] Appendix: None Background Papers: Draft Local Asset Management Pilot Partnership Agreement Report to Policy and Resources Committee 9 December 2018 BACKGROUND 4.1 The Comhairle has long argued that island communities should be involved in decisions regarding the use of the seabed around the Outer Hebrides. Until recently, decision making regarding seabed leases around the UK were taken by Crown Estate Commissioners based in London with no consultation with host communities. In addition, all revenues from these leases were returned to HM Treasury in London, leaking out of the fragile island economy. 4.2 Vigorous lobbying by the Comhairle and others led to Crown Estate management being included within the scope of the Smith Commission’s exploration of additional devolved powers for Scotland. The Smith Commission recommended that management of the Crown Estate’s assets in Scotland should transfer to the Scottish Ministers in the first instance and, “following this transfer, responsibility for the management of these assets will be further devolved to Local Authority areas such as Orkney, Shetland, Na h-Eilean Siar or other areas who seek such responsibility”. 4.3 On the question of revenues leaking out of the island economy, Scotland’s First Minister stated 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”. 4.4 The Crown Estate (Scotland) Act 2019, which brought Crown Estate Scotland into being, contained provisions for the transfer of Crown Estate asset management powers to Local Authorities and the return of net revenues to Local Authorities based on a sea area formula. The Comhairle was one of the first Local Authorities to take the initial step towards transfer of asset management powers through participation in a Crown Estate Scotland Local Asset Management Pilot scheme which is detailed in this Report. And Crown Estate revenues have now begun flowing back to Local Authorities - £1.7m for 2019/20 and £2.3m for 2020/21. CROWN ESTATE SCOTLAND LOCAL ASSET MANAGEMENT PILOT 5.1 When the idea of an Asset Management Pilot was floated by Crown Estate Scotland in 2018, the Comhairle consulted with the community land sector and Galson Estate Trust (GET) came forward with a desire to manage seabed leases (Renewable Energy only) in the Trust’s sea area which, in landward terms, extends from Barvas, around the Butt of Lewis to a point north of Tolsta. 5.2 A joint proposal was developed between the Comhairle and GET and progressed to ‘Preferred Project’ status late in 2019. Under this proposal, GET will manage Renewable Energy leases in the GET sea area while the Comhairle will manage non-Renewable Energy leases in the GET sea area and all leases across the remaining Hebridean Marine Region, out to 12 nautical miles. 5.3 A new Outer Hebrides Marine Development Partnership (OHMDP) will be established comprising representatives of every agency with an interest in the marine sector in the Outer Hebrides. The OHMDP will review all lease applications around the Outer Hebrides and will form a recommendation on the proposal from the perspective of marine environment, fisheries, shipping and other sea uses. Simultaneously, the area Community Landlord will be invited to prepare a Community Impact Assessment outlining the impact of the proposal at the micro, community level. The Community Landlord, or Community Council where there is no Community Landlord, will provide a view on the proposal, the capacity of local infrastructure to sustain the development, the potential for business start-ups in the host community and so on. 5.4 For Renewable Energy lease applications in the GET sea area, elected GET Trustees will determine whether the lease should go ahead or not, informed by the recommendation of the OHMDP and its own, officer level, assessment of community impact. 5.5 For non-Renewable Energy lease applications in the GET sea area and for all other lease applications in the Hebrides Marine Region, a new Outer Hebrides Marine Leasing Committee (OHMLC), populated by elected Comhairle Members, will determine whether the lease should go ahead or not, informed by the recommendation of the OHMDP and the Community Impact Assessment submitted by the area Community Landowner or Community Council. Importantly, membership of the OHMLC and the Comhairle’s existing Planning Applications Board will be mutually exclusive so that no Member is involved in decision making on both Aquaculture consents (Planning Permission) and Aquaculture leases (Crown Estate Pilot). 5.6 These local determinations will then be subject to a Crown Estate Scotland ‘Due Diligence’ check. This provision is important because the Chief Executive of Crown Estate Scotland remains the Accountable Officer before Parliament. 5.7 The Pilot scheme will deal only with the Yes/No determination on leases. Crown Estate Scotland will continue to set rent levels (to maintain consistency across Scotland and to eliminate competitive advantage through local rent-setting), handle all financial flows, manage the lease throughout its lifetime and deal with site reinstatement at end of lease. FUTURE POSSIBILITIES 6.1 The Comhairle has always been clear that the island community should manage its own marine assets. In pursuance of this long-held objective, the Comhairle intends to take advantage, through the Crown Estate (Scotland) Act 2019, of the Act’s provision for permanent transfer or delegation of Crown Estate management to the local community. While the Crown Estate Scotland Local Asset Management Pilot Scheme is quite an undertaking for the Comhairle, the Cabinet Secretary has indicated that permanent asset management transfer will only be considered where the local area has successfully delivered an Asset Management Pilot. 6.2 Other advantages of participating in this Pilot include a transformed relationship with Crown Estate Scotland. The Comhairle is now regarded by Crown Estate Scotland as a key partner and the benefits of this new relationship are already evident in the interest being shown by Crown Estate Scotland in the proposed Outer Hebrides Energy Hub with the potential for