Charities’ interests in land
Image: Map of Applecross Estate
Proposal 6 in the Scottish Government’s consultation paper on land reform (see link here) is to introduce a statutory duty of community engagement on charitable bodies that own land. There are four main types of charitable bodies that own land and property.
1. Environmental charities such as the National Trust for Scotland, Scottish Wildlife Trust and Royal Society for the Protection of Birds;
2. Educational bodies such as universities, colleges and private schools;
3. Community bodies that own anything from a village hall to large estates such as South Uist, Assynt and Knoydart; and
4. Landed estates formerly owned by private individuals that have been transferred into charitable company and trusts. These include estates of Applecross, Isle of Bute, Drummond Estate, much of Atholl Estate and Conchra Estate.
Environmental and community bodies have reacted to the proposal with irritation, claiming that they already engage with communities. Likewise with community bodies which already have membership open to all who live in the community and are run by boards of directors elected by the community.
In a blog on the Scottish Community Woodlands Association website, Jon Hollingdale makes the case that imposing such a duty across the board is an over-reaction to a problem which is quite modest in scale.
“If the issue is with the tiny cohort of private Scottish charities whose landholdings give them a local monopoly, then, rather than imposing general burdens on all, the smart answer is to take another look at the charitable status of these organisations.”
There are a number of charitable bodies that were set up by previous private owners (often for tax purposes) and which, today, own quite large landholdings. Typically, the membership is restricted to a fixed number and with special appointment rights in the hands of the former owner.
For example, the Mount Stuart Trust owns 23,800 acres of the Isle of Bute. It was set up by the 6th Marquess of Bute in 1985 as a charitable trust and incorporated as a company limited by guarantee with no share capital in May 1989.
Under Article 21.1.2 of the Articles of Association of the company, the Marquess of Bute has the power to appoint up to four Directors even though he himself is not a member, a tax-exile and non-resident in the UK.
The Applecross Estate extends to 61,600 acres in Wester Ross. It was bought by the Wills tobacco family in 1929 and is owned today by the Applecross Trust, a company limited by guarantee with no share capital. Back in 1978, the Wills family were worried about the impact of capital transfer tax and, to avoid exposure to it, decided to transfer the estate into a charitable body. As they noted in a letter to residents at the time,
It continues,
Copy of full letter here (2Mb pdf)
Today, the estate is still owned by the Trust and its membership is still associated with the Wills family, Richard Wills being the current Chair of the Board. None of the board members lives in Applecross.
In 2012, around 100 people applied as part of the Land Action Scotland campaign to become members of the two charities the, Mount Stuart Trust and Applecross Trust. All applications were refused. The Applecross Trust response is outlined here & a media report here.
Many local people in Applecross would like to become members of the Trust and play an active role in the management of the estate. The peninsular is very rural and has a fragile economy. Development to retain and create jobs is vital and yet the trust’s charitable objectives are restricted to preservation, environmental protection and amenity, public access and the advancement of education, arts, heritage, culture and science.
This makes it difficult, for example to develop housing since the charitable objectives do not include economic development and thus any sale of land has to be at open market value which is beyond the reach of most local people.
Meanwhile, the Chair, Mr Richard Wills, through a partnership of which he is a member (Deer Management Consultants), rents the deer stalking on the estate. The rent is negotiated on an independent basis with no involvement from Mr Wills. Similarly, Mr Wills rents Applecross House (pictured above) and fishings in the Applecross River for £10,200 per year from 2014-2029. When not at his country house in Applecross, Mr Wills lives in a large country house in Hampshire (pictured below)
Despite the independent arms length negotiation, it is open to question whether these rents represent the best that can be obtained on behalf of the charity in the market. Other similar country houses are available on estates in the region for between £2000 and £2800 per week. Applecross Estate rents the Applecross Manse (sleeps 7) for £1080 per week on the open holiday lets market.
The question raised by the consultation is whether these estates should continue to be owned and managed by charitable bodies that restrict membership to a few members of family and friends, provide exclusive nomination rights for tax-exiles such as the Marquess of Bute, but yet refuse to allow the beneficiaries of the charities – the local population – any right to become members or Directors of the respective company boards. The Applecross Trust even has a vacant on its Board following the resignation of Charles Peregrine Albermarle Bertie in December 2012. But it remains unfilled.
I think it is time to open up these closed shops, review their governance and allow the wider community to have the opportunity to have a stake in the future of their community.
The Trustee/Beneficiary relationship – which IMHO was in large part invented by lawyers for lawyers – has no place in the 21st Century, and neither does charity.
The Applecross and Mount Stuart ‘Trusts’ with which you did battle were of course not true Trusts (created by a deed) at all. They were and remain corporate legal persons in the form of a Company Limited by Guarantee.
It was fascinating to read the Wills’ letter and the fact that they described themselves as ‘custodians’, which is a very different relationship to that of a Trustee.
I remember a few years ago meeting someone with 1500 acres in SW Scotland which has been in the family since 1500. He genuinely did not see himself as the owner at all – merely the custodian/steward for future generations, and he came to see me about how he could build affordable housing on his land without alienating it. He would not sell land, because he did not see it as his to sell, and he would not borrow against it because he would thereby risk losing the land if events took the wrong turn.
I attended a meeting last year as a ‘trusted third party’ between the Applecross Community Company and the Applecross Trust, who are not always noted for mutual understanding. I established that there was a common interest in the development of affordable housing; in renewable energy, and in energy savings, among other things.
The question – as with the enquirer from SW Scotland – was how on earth such development could be financed and funded without potentially alienating the land?
I believe that the answer lies in the simple but radical form of funding – rental credits prepaid at a discount – which UK sovereigns employed for rentals/land taxes for centuries before the Bank of England came along.
The routine use of such Prepay credit survives in the English language to this day, in the phrases ‘tax return’ (the return of the sovereign’s credit instrument to the Exchequer for cancellation); ‘rate of return’ (the rate at which a discount on issuance may be achieved upon return of the instrument to the issuer; and of course the word ‘stock’ itself, which was in fact that half of a wooden tally stick accounting record held by the investor/creditor. Shares of ‘common stock’ in a Joint Stock Company and fixed interest-bearing ‘loan stock’ were later aberrations.
But I digress into the history of finance.
The fact is that it is entirely possible – and in the interests of land-owners themselves – to sustainably develop their land using suitable risk/production sharing agreements for developmentfinancing, and to achieve sustainable funding through the admission of new classes of occupier and investor membership to the ‘Trust’ Company Limited by Guarantee.
There is no reason why the founder of such a CLG should not retain a veto right as steward or custodian while he lives. This passive veto right of governance is a very different right to the active dominant right of a trustee over real property on behalf of beneficiaries.
I shall post my submission to the Land Reform Review Group by way of reference, to anyone interested in more detail.
http://www.andywightman.com/docs/nordicenterprisetrust.pdf
Such an approach represents a genuine paradigm shift away from housing as a commodity towards housing as a service. But I believe this is achievable with no change in the law, simply by agreement between the stakeholders, and that is what I aim to prove.
Handy having the tax payer funded road to ones Mansion, I may have to Stop following these blogs, ignorance must be bliss, how ever these practices are all around me, when i point them out folk sometimes shrug and look at me as if i am mad, but thank you Andy for giving a damn, at least i ken there are others who will not be good slaves and say nothing.
Chris, those are some very interesting ideas. The way the “ownership” of land is organised is increasingly unfit for purpose in a modern, complex world. I think Andy talked about land relations being about power in another blog. This is correct. Land relations govern the relationship between society and land and we have developed a land tenure system that only concerns itself with “rights” (search in vain in any title deeds for any mention of responsibilities) and legal relationships that are principally concerned with the defence of power leading to “blocs” that rally to the defence of that power.
I remember when the Land Action Scotland campaign was launched, the Glasgow firm Media House led the attack on behalf of SLE, Applecross and Bute. How to we negotiate new power relations in a situation with so many vested interests and so little room for deliberative inquiry?
Cheers, Alan.
We think of Property as a ‘thing’ to be transacted but it is in reality a relationship – a bundle of rights….and indeed responsibilities.
I believe it is entirely possible to create a consensual agreement to which all stakeholders in the use, usufruct and stewardship/management of land may subscribe, and which will transcend both statute law and judge-made ‘equity’. Such associative agreements are the norm East of Suez.
As with Condominium agreement/tenure in the US – which was dreamt up by a smart lawyer and went viral and then was codified and went mainstream – I think there is no reason why such a bottom up ‘Nondominium’ agreement (as I have termed it) could not be prototyped here or come to that, anywhere.
As with any new paradigm, it’s not really enough to talk about it. It must be demonstrated in action, and that is what I have been working on for a long time.
I’m not quite clear why land-owning charitable bodies should be “irritated” by the requirements being proposed. If they are, indeed, already involved in community engagement, then surely they have nothing to worry about? It seems much more likely that the bulk of them are not so engaged, and are annoyed at having to stir themselves.
On the broader matter of widespread land ownership by charities and trusts, I think it is unfortunate that the status of these bodies seems to result in the general public taking a rosy view of their activities. In reality, widespread ownership by charitable bodies is often no better (and, in some case worse – if that is possible) than private ownership. Though I would concede that at least a charitable body must have a bona fide address.
Indeed Stuart, they are much part of the land-monopoly capitalist system and indeed the oxymoron of national parks that are not owned by the nation( ie the national community does not own its own NPs) as the private concerns that dominate land tenure in Scotland and to that extent they are part of the ‘problem’. At present their ‘conservation’ activities and charitable status allow them to avoid various imposts and taxes and/or receive public funds they otherwise might not obtain. It is time to review their derogations of contributing to public funds and I would adopt a very tight designation of their future responsibilities in having to pay Land Value Rates/ Land Rental Values.
The fact that a privately-owned estate can be converted to a charitable organisation but control (in effect) remain in private hands looks utterly corrupt. It devalues the whole concept of charitable organisations set up to deliver a public benefit.
right on the button Noel
That is the accurate summary of this. A lot of the Queens estate is tied up in such ways.
Rather like the issues of Hunting Estates across Scotland, baron land, open to select, devoid of paying tax thanks to convenient systems and loopholes.
Its a hideous waste of land, more so just for a blood sport only a select few enjoy or afford.
If you mention the titles of the two Applecross organisations to the man on the Leith omnibus there is a supposition that the Trust are the “good guys” and the Development Company the “bad guys”. There is a general assumption that charities are worthwhile institutions and “developers ” has a negative connotation. Fragile rural communities obviously need to development but perhaps we need a different description for this. If the set up of these Trusts was made clear to the public nobody would want to see them as a charity and genuine charities ought to have an interest in seeing this dodge scrapped.
In fact neither the Applecross Trust nor the Applecross Community Company has ‘development’ in the title.
But you do raise an interesting point.
Development requires risk-taking, and trusts are by definition risk averse, so I have long argued that a ‘Development Trust’ is a contradiction in terms. Despite that, many development trusts do successfully achieve asset development.
However, in doing so, the conflicts and complexities of the contractual relationships, and the limitations of available funding mechanisms mean that the process is slow, convoluted, and incredibly costly in legal and professional fees.
Chris – I read your submission to the LRRG but I have to be honest and say I struggled a bit with how your concepts of Nondominium and Pre-pay might work in practice. Could you help by painting a picture of the concrete example of a house plot involving the stakeholders of current owner (estate), housing association, local authority, funder, builder and young family who will eventually live there. Add in a budget of £100k (is that enough? if not not, whatever is sufficient to deliver an affordable house) and explain who pays what to whom and when and in what tranches. I always think a worked example is immensely helpful putting forward a case.
I have no problem with charities being required to engage with local communities (I’ll declare an interest here as a trustee of the John Muir Trust) but I have one question and some issues with the consultation:
1. The question: if engagement with local communities is desirable, why single out charities as the only landowner obliged to engage with them? I reckon that it should be a requirement on all landowners (subject to practical considerations in 3 below).
2. The consultation: this is INCREDIBLY badly worded, asking about the duty of “a trustee” rather than the duty of the Board of Trustees (or its equivalent) – it is a collective and not an individual responsibility.
3. Practicality: as worded, the consultation requires engagement over management, use or transfer. But at what level? Management of land includes things like deciding to renew fencing (not a favourite activity of JMT, granted, but for the sake of an example) or repairing a path or …. Is the community to be engaged with on every detail of management?
NET: I believe this requirement, if upheld, should apply to ALL landowners with more than a certain amount of land (eg it would not apply to someone owning a field where they graze their horse).
Very good points Heather which I’ve taken the liberty of incorporating into my response to the consultation! It’s typical of the muddled thinking which surrounds “land reform” that the SG can’t see the illogicality of placing a duty of local consultation on charitable landowners but not private ones! Your point about the bad wording of the consultation is well made as well. It would appear to be broad enough to require say, Cancer Research or Barnardos [et al], to consult with the local community before closing and selling a High Street charity shop.
BTW, what is JMT’s policy on local consultation? Would JMT take the view that it can’t release a house site at less than full value because local housing is not one of its charitable objects?
Hi Neil,
One thing I omitted from the above is that it can be important to consult with “communities of interest” not just local communities, eg those who visit and walk on our wild land.
As for your question, I’m contributing here as an individual, and I’m not able to respond on a specific question with a JMT hat on (I leave that to the press team!). I only mentioned my position as trustee to be transparent 🙂
JMT’s response to the consultation is (or will be) available publicly so feel free to have a look at that in due course (it does explain our approach to consultation). It will be at http://www.jmt.org/consultation-responses.asp. You can also find all our policies at http://www.jmt.org/policies.asp (the Acquisition policy also touches on land disposal). Hope that helps…
The problem is organisations with charitable status but strange practices for appointing trustees which allow them to maintain a dynastic control over properties which are allegedly being managed in the public interest. Organisations like the JMT – with open membership and trustees elected by the members – aren’t part of that problem.
Open membership & elections, or something similar, ought to be requirement for charitable status to prevent this kind of abuse – perhaps this particular issue should be tackled from the direction of charities legislation rather than land reform.
I agree, that’s kind of where I’ve ended up thinking the changes are needed to address this specific issue…
Heather,
I think you will find that many landowners are statutorily obliged to engage with communities through the planning process (planning applications on public register), forestry schemes (LTFPs displayed at scoping meetings) amongst others.
Also intriguing that Applecross is administered by SRUC, which in turn receives grant in aid from Scottish Government.
A little bit of local knowledge on the Applecross situation would not go amiss. Andy Wightman’s previous campaign in 2012 was not supported by the vast majority of the local indigenous population because it was seen as outsiders parachuting themselves into the running of our community. Why did Andy not call a public meeting to test the waters before launching his campaign?
On the housing front, the Applecross Trust has an ongoing process of refurbishing properties for rent to locals which provides very good quality accommodation at reasonable rents. Other properties have been turned into holiday homes providing seasonal work. The Applecross Trust also provided land for the Craite Barn housing development which also provides affordable rentable properties run by a housing association. It was Tory Government policy which led to the selling of the few council houses we have here.
Many crofting townships do not wish to sell off plots of land on the common grazing as this leads to unsightly ribbon development which is not in character with the local hamlets.
Many local people are concerned regarding those who wish to join the Applecross Trust- we would wish to know who they are and what their agendas are. They need to be open with the local population about their intentions.
Jingleanna, who are the “local indigenous population”? I applied for membership of the Applecross Trust, not because I wished to join and run your community but to try and establish a principle – that these kinds of charities should be more open in their membership. You say that you would wish to know who these people are and what their agendas are. But you have no say over who joins the Trust at the moment. What about the slot left vacant by Mr Bertie? Has anyone consulted you on whether someones has been appointed or what their agenda might be? Are any of the current members part of the “local indigenous population”?
I’m afraid you and your ilk shot yourselves in the foot by applying to join the Trust. Why should we wish to have any Tom,Dick or Harry (many of whom would not have heard of Applecross before the Land Action campaign) having a say in our affairs? If a truly local representative, who had the confidence of the local indigenous population ,was to be appointed I believe it would be beneficial to the Trust and the Community. However, the ‘locals ‘ who have expressed interest, as far as we know ,are incomers/ white settlers. In no way can they be considered to represent the local community.
The fact that a single family which owned a property privately in the past can continue to maintain control through the front of a charitable organisation looks utterly corrupt. I’ve been a charity trustee in the past (which coincidentally benefited from the use of one of the estate properties) and a dynastic setup of this kind seems impossible to square with the idea of acting in the public interest. This looks like an abuse of charitable status in order to pursue a private interest.
Do you agree? If you do, don’t you think we should do something about that?
Your use of the term “indigenous” and “white settler” is, frankly, racist. I live in a community. We have a number of community organisations. Everyone who is ordinarily resident on the voter’s roll is entitled to a say in the affairs of the community. They are all equal and no distinction is made on the kind of grounds you imply. Are you a member of the “indigenous population”? How do you define such a group?
Interesting comments but hopefully unrepresentative from Applecross. Having spent many nights at the Applecross Inn and got to know many residents, I call them residents rather than incomers/White settlers, found that Jingleanna’s view on life to be reprehensible and a minority one. To my knowledge this is a community which is struggling hard to survive and gets very little help/encouragement from the land owning charity. It is not the Trust which is providing services for the community, like broadband, public toilets and fuel. Not only that but it is taking approx £150,000out of the community as rent for a community hydro scheme on one of their rivers.
One could argue if it was a private landlord he can do what he/she likes but this is a “charity”. A Charity which does not move unless it receives public money to do up it’s property, paths and walls maybe should have some responsibilities to the community it “owns”. If all you want is holiday cleaning jobs then it does provide local employment. Speaking to the residents the above view is not prevalent in the community as most people have the view that we are all incomers, the first arriving on the peninsula as “first settlers” 10000 years ago.
I was in Applecross at the time of the LAS campaign and found a lot of residents were stressed out but many were misinformed and did not get the point of the campaign, some I suspect deliberately and turned it into some thing it was not. Why should a charity run a community where the Trustees do not live in the community and have a distorted view of it and it is not run for the community but the benefit of the Charity. Also when did charities become heritable?
The benefit coming from LAS is that you can discuss land reform openly now at the Inn instead of staying quiet and tugging the forelock. Fascinating to read how some people are classed in terms of superiority, the absentee trustees are above the incomer residents but the indigenous must be on top?? As Alan says pure and simple racism. There are many visitors, like me, and residents now believe that land reform is long overdue and those views of Jingleanna’s confined to an uneducated past.