The Smith Commission, the Scotland Bill and the Crown Estate
Introduction
One of the Smith Commission agreements was that responsibility for the management and revenues of the Crown Estate in Scotland should be devolved to the Scottish Parliament. (1)
This Agreement reflected the widespread consensus in Scotland that the management of the Crown Estate should be devolved. There have been several inquiries into this topic over the last ten years, from the Crown Estate Review Working Group (2007) to Westminster’s Scottish Affairs Committee (2012), which also recommended the devolution of the Crown Estate in Scotland. (2)
The Smith Commission also agreed, like the Scottish Affairs Committee before it, that devolution should be followed by further decentralisation to local authorities, communities and others, of responsibilities for the various Crown property, rights and interests that make up the Crown Estate in Scotland. Both the Scottish Affairs Committee and the Smith Commission were clear, however, that this decentralisation was to take place after the devolution of the management of the Crown Estate to the Scottish Parliament. (3)
The Scotland Bill was published on the 28th May by the UK Government and is now on its hurried passage through the UK Parliament. (4) It is intended to implement the Smith Commission agreements. Clause 31 of the Bill that deals with the Crown Estate, however, completely fails to do this and needs to be re-drafted.
But, first, some background.
The Crown Estate
The Crown Estate is the name given in the Crown Estate Act 1961 to the various Crown property, rights and interests that are managed by the Crown Estate Commissioners (CEC). The CEC is a statutory corporation first constituted by the Crown Estate Act 1956 and now operating under the 1961 Act. The CEC transfers its net surplus revenue or ‘profit’ each year to the UK Government’s Consolidated Fund for use in public expenditure. (5)
The CEC is thus the manager of property rights that belong to the Crown. However, there can often be confusion between the manager and the property, because the CEC has branded itself for its corporate identity as ‘The Crown Estate’. The Treasury Committee also felt it necessary to emphasise in its report on the Crown Estate, that “the CEC are a public body charged with managing public resources for public benefit”. (6)
The Crown property, rights and interests that make up the Crown Estate in Scotland are legally and constitutionally distinct from those in the rest of the UK, because they are owned by the Crown in Scotland and defined in Scots law. Scotland’s Crown property rights are of ancient origin and continued to be administered with their revenues in Scotland following the Union of Crowns in 1603 and the Treaty of Union in 1707. Some of these Crown rights continue to be managed in Scotland by the Scottish Government and Crown Office. However, the administration and revenues of many of Scotland’s Crown property rights were transferred from Edinburgh to a government department in London in the 1830s. That department and its successors, were the predecessors of the current CEC.
The Crown property rights managed by the CEC in Scotland include Scotland’s territorial seabed and Crown rights over the Scotland’s continental shelf zone (see map above), around half of Scotland’s foreshore, the right to mine gold, salmon fishings, four rural estates and two urban properties. The Crown Estate in Scotland only accounts for around 3-4% of the value attributed to the UK wide Crown Estate and revenue produced by it. The CEC’s annual ‘profit’ from its operations in Scotland, has been around £5m in recent years. (7)
The Scotland Act 1998 devolved legislative competence over Scots property law, including Crown property rights, to the Scottish Parliament. The first Scottish Parliament, for example, used this legislative authority to abolish the Crown’s ultimate ownership of land in Scotland under feudal tenure. However, the reservation of the management of the Crown Estate in the Scotland Act, precludes the Scottish Parliament from being able to legislate over the rights managed by the CEC and also means that the CEC is not accountable to either the Scottish Parliament and Government for its operations in Scotland. Implementing the Smith Agreement would complete the devolution process started in 1999 and bring the rights and the management together under the legislative competence of the Scottish Parliament.
The Scotland Bill
The Smith Agreement to devolve the management and revenues of the Crown’s property rights should be straightforward to implement in legislation.
The two main requirements are to amend the Scotland Act 1998, Schedule 5 Part 1 by;
1. removing clause 2(3) that reserves the management of the Crown Estate in Scotland and,
2. removing clause 3(3)(a) that reserves the revenue from the Crown Estate in Scotland.
Removing these two reservations would mean that responsibility for managing the Crown property rights that currently make up the Crown Estate in Scotland, automatically falls to the Scottish Parliament.
Appropriate legislation also needs to cover some consequential amendments to other legislation, in particular to the Crown Estate Act 1961 to reflect that it would no longer apply in Scotland. In addition, the legislation requires some procedural provisions dealing with the transfer date and process.
Unfortunately, clause 31 in the Scotland Bill manifestly does not implement the Smith Agreement. The clause does not devolve the responsibility for the management of the Crown Estate in Scotland to the Scottish Parliament. Instead, the clause delegates existing functions of the CEC as a statutory corporation to Scottish Ministers or others transferees through a Treasury ‘scheme’.
The current clause 31 attempts to enable the CEC to continue to operate in Scotland and to bind those to whom functions are transferred to the restrictive terms of the Crown Estate Act 1961 under which the CEC operates. The clause’s provisions to try to achieve this are, as others have commented, complex and unclear. (8) They are a recipe for confusion and legal anomalies. They do not devolve legislative responsibility over the Crown property rights and revenues involved in Scotland to the Scottish Parliament and will frustrate the widespread consensus for the further decentralisation of these within Scotland. (9)
Re-framing Clause 31
The Smith Agreement to devolve responsibility over the Crown Estate in Scotland reflects the longstanding agreement in Scotland over this matter and it should be straightforward to implement through the Scotland Bill. Why then does the existing clause 31 fail to do this?
This blog argues that this current state of affairs has arisen because of the degree of influence that the CEC has had on the nature of clause 31. The sequence of Committee inquiries and reports into the operations of the CEC show how CEC corporate policies have been aimed at maintaining it as a UK organisation. IN 1998, the CEC declined to participate in the devolution process in the way that the Forestry Commissioners did (and have continued to do). The starkest example, however, was in 2001/02 when, against the flow of devolution, the CEC ended its management of the Crown Estate in Scotland as a separate management unit with its own manager and financial accounts, so that the CEC could assimilate its operations in Scotland into those in the rest of the UK. (10) The current clause 31 with its stretching and twisting of the Crown Estate Act 1961, can be seen as the CEC’s latest move to try to retain the Crown Estate as a UK wide estate.
Furthermore, it is distressing to note the continuing mis-understanding of what exactly the Smith Commission agreed. For example, a briefing issued by the Scottish Parliament, claims that it is the “powers of the Crown Estate Commissioners [which are set out in the 1961 Act] which would be transferred to Scottish Ministers.” (11)
This is wrong.
The Smith Agreement patently does not say this. It says that responsibility for management will be devolved to the Scottish Parliament. That is an entirely different matter from a mere delegation of functions to be exercised within the framework of continuing reserved powers.
The Scottish Government’s initial response to the Scotland Bill recognises the need to re-frame clause 31, so that the clause removes the reservations in the Scotland Act 1998 over the management and revenues of the Crown property rights in Scotland forming part of the Crown Estate. (12) The terms of the Scottish Government’s proposed alternative clause 31 still suffers from some other weaknesses. However, it is to be hoped that all the parties involved in the Smith Commission will recognise that the issues over clause 31 are not party political.
Solving this problem is a simple matter of re-framing the clause in a competent was so as to implement the Smith Agreement in as straightforward a manner as possible.
- Smith Commission page 16
- See Crown Estate Review Working Group Report and Scottish Affairs Committee Report.
- See, for example, Lord Smith’s evidence to Scottish Affairs Committee 3 December 2014. Q137-Q140
- Scotland Bill
- Section 1(2) Civil List Act 1952
- House of Commons Treasury Committee Report, 2010 para 10
- Scottish Affairs Committee Report para 39
- See Devolution (Further Powers) Committee report
- For example, the Bill amends the Civil List Act 1952 to obligate the payment of all Crown revenues to the Scottish Consolidated Fund. Decentralisation to, for example, to harbour trusts will be constrained by a continuing legal constraint to hand over all revenues to the Scottish Government.
- Scottish Affairs Committee Report para 21
- See SPICE/Clerks/Legal Briefing page 15 “Provision has been made to amend the Crown Estate Act 1961 to reflect the new role for Scottish Ministers (SMs), but to retain the requirement to manage and improve etc the property, rights and interests being transferred subject to the remaining provisions of the Crown Estate Act 1961. This reflects the Smith Commission recommendation that it would be the powers of the Crown Estate Commissioners [which are set out in the 1961 Act] which would be transferred to Scottish Ministers.”
- See Scottish Government alternative clause, pages 12-13 and 43
OTHER DOCUMENTS
House of Commons Library Briefing on Scotland Bill
A very clear summary Andy. I look forward to your contributuions in the Scottish Parliament. The Commissioners quite enjoy their jaunts to Scotland, it’s their little playground, I’m sure they would like to hold on to it.
Devolution of the CEC functions to the Scottish Government was for me a vital SNP promise at the election. The completion of this was presented as a simple formality as — good as done. The perverse actions of remote civil servants must not be allowed to wreck such a simple change. And the Scottish government must use all its influence to sort this. Otherwise it will be considered easily hoodwinked and capable of nothing.
I think what we are seeing is the Crown Estate meddling in the legislative process in pursuit of its own interests.
The importance to the local and national economy in terms of the potential for the collection of land rental values cannot be underestimated. The ‘right to mine gold’ is a dead giveaway
Civil servants and politicians must hate Andy Wightman. To be honest, it is unusual to find clarity of purpose and prescient accuracy on political matters these days but it can be found on these pages. It is still beyond belief that a Vow can be diluted by a Commission and this can then be circumvented by a remote Parliament. Where does it end? Back at the beginning?
How I wonder, would the CEC reservation on the ‘right to mine gold’ affect the recent developments at Wanlockhead?
Planning permission is required one way the other and applies now, the only difference being that the CEC would be answerable to Holyrood. The importance is not just the gold or the oil, but all the mineral, biological and non tangible resources contained within the 30% of the terrestrial surface, 50% of the marine solum and 70% of the coastline of the UK that is Scotland and how it creates a revenue potential for the 9% of the UK population that lives in Scotland. It is one of the most favourable resource to population ratios in Europe.
The important objective is that powers and resources should transfer to coastal communities. Both Smith and Scottish Affairs Committee saw Scottish Gov only as a conduit. That is the test against which legislation should be tested and amended. Making it devolved rather than reserved would not of itself achieve that objective.
Brian Wilson
Well the power and resources are not being transferred to coastal communities under Westminster remit are they? How that power and resources could be allocated between local communities and the nation ( Scotland) as a whole can be discussed and voted in the forum that is Holyrood. Argyll, including its islands have a greater amount of coastline than France. The potential land revenue from a zone that facilitates every manifestation of shoreline infrastructure for industrial, recreational and domestic purpose in a modern society, is likely to be very substantial.
Indeed both Smith and Scottish Affairs saw Holyrood as a conduit. But unless decentralisation is legislated for in the Scotland Bill (which would be a bit daft as there needs to be ongoing flexibility), the first stage is devolution to Holyrood. Moreover, that is as far as the the Smith Commission’s remit ran. But all parties in Smith were committed to decentralisation which is why it made an explicit commitment on that point even though it was not strictly within its remit. The problem we have now is that as drafted, Orkney Islands Council and Mallaig Harbour Trust will in effect be substitutes for the Crown Estate Commissioners and be bound by the same legislation (including provision that no-one may inquire into their business etc.) Moreover, the current bill insists that the revenues remain Crown revenues and thus bound by Civil List Act 1952.
Beautifully incisive as usual Andy. Is there any reference to the north sea maritime border between England and Scotland in SC?. If not why not. This is surely an excellent time to redress this gross gerrymandering of maritime sovereignty.
The boundary remains for the purposes of delineating the extent of application of devolved governance in Scotland. However, the Crown Estate raises an interesting issue since the Crown in Scotland has competency to the original boundary. This is one of a number of detailed issues that have been overlooked.
If I’ve understood you correctly Andy, your concern about clause 31 as presently drafted is that, while it transfers the management of the Crown Estate in Scotland to the Scottish Ministers, it does not devolve management of the CE in Scotland to the Scottish Parliament. And thus the SP would have no legislative competence further to sub-devolve to local authorities etc.
However, does that conclusion not overlook clause 31(2)? This amends the definition of the Crown Estate in Schedule 5 to the Scotland Act 1998 (reserved matters) to become “the Crown Estate (that is, the property, rights and interests under the management of the Crown Estate Commissioners)”? If management of the Scottish part of the CE has been transferred to the SMs, then it’s no longer under the management of the CECs. Thus it’s no longer reserved so the SP has competence over it. That could include repealing section 31(5) (which applies the Crown Estate Act 1961 to management of the Scottish CE by the SMs as an interim measure pending further order being taken by the SP).
The Scottish Parliament will have no competence to repeal Section 31(5) since it will be part of the Scotland Act which itself can only be amended by the Uk Parliament either through legislation or by a Scotland Act 1998 Section 30 Order.
Yes but is it not the case that it’s only the Scotland Act *1998* that can’t be modified by an Act of the Scottish Parliament? Clause 31(5) will become part of the Scotland Act 2015 which I don’t think is protected from modification. Note also clause 31(6)): “Subsection (5) is subject to any … enactment, including an enactment comprised in, or in an instrument made under, an Act of the Scottish Parliament.”
I am sure there will be some provision that new Scotland Act will not be amendable by SP otherwise that negates the purpose of devolution and would allow the SP to, in effect remove all reservations and declare independence! Sections 31 (6), (7) & (8) are there to allow SP to amend who the transferee is – in other words to provide freedom at any time to shift the functions around. All transferees are bound by 1961 act as is made clear in 31(5)
Yes, there are some Acts of the UK Parliament which have to be immune from modification by the Scottish Parliament to prevent it exceeding the limits of devolution. These include the Scotland Act 1998 (SA98, Sch. 4, para. 4) and various other Acts listed in SA98, Sch. 4, para. 1.
If the Scotland Act 2015 is to be one of those immune from modification by the SP, then it needs to contain a provision adding itself to the list in para. 1. I don’t think the bill has one.
I suspect this immunity issue is why clause 31 is divided between subsection (1) which adds a new section 90B into the 1998 Act (i.e. the bits that can’t be modified by the SP) and the remaining subsections which are stand alone (i.e. the bits which can be modified by the SP as they’re not insertions into SA98 or being added to SA98, Sch. 4, para. 1).
If I’m right, the conclusion is that the SP will be free to repeal/amend in due course subs. (5) binding the transferee (assumed to be the Scottish Ministers but not necessarily) of the Crown Estate in Scotland into the management regime of the Crown Estate Act 1961 as an interim measure.
The Scotland Bill is constitutional legislation defining the competence of the Scottish Parliament. The constitution is a reserved matter.
All the inshore assets should be sold off, the govt has no business being a property speculator.
Agreed, as the government, as landlord, can’t charge itself LRV for is own property, but who to: lairds, foreign billionaires, multi-nationals or to community buy outs funded in large part, by well. er —the government?
sell to the tenants of course, on easy terms.
same as in ireland
There’s no reply link under it but this is a reply to Andy’s comment above, June 14, 2015 at 11:25 am:
“The Scotland Bill is constitutional legislation defining the competence of the Scottish Parliament. The constitution is a reserved matter.”
Not all of the constitution is reserved. Only the aspects of it listed (a) to (e) in para. 1 of Schedule 5 (reserved matters) to the Scotland Act 1998. Note that the competence of the Scottish Parliament isn’t one of them. The SP is precluded from amending its own competence, not because that’s a reserved matter, strictly speaking, but because its competence is set out in an Act (Scotland Act 1998 as amended by the Scotland Act 2012) which is included in Sched. 4 to the 1998 Act (enactments etc. protected from modification). As there doesn’t appear to be anything in the current bill to add s.31(5) to Sched. 4, and as (once the transfer of the Scottish Crown Estate has taken place) it will not deal with a matter which is reserved, there will be nothing to prevent the SP from amending or repealing it.
In fact, sub clauses (6) to (9) of cl.31 specifically contemplate alternative provision to subcl. (5) being made by SSI and affirmative procedure in the SP. And don’t take my word for this – the explanatory notes to the bill say:
“203 The [Crown Estate] Commissioners currently have a duty under the Crown Estate Act 1961 (c.55) to manage the Crown Estate on a commercial basis. Depending on any future legislation passed by the Scottish Parliament, the Scottish Ministers may be able to take a different approach to managing the Scottish assets (for example, to adopt a less commercial approach to some aspects of management, including widening the role of social enterprise). … 217 As mentioned above, clause 31(5) modifies the Crown Estate Act 1961 as it will apply to the transferee after the transfer. However, the Scottish Ministers may wish to adopt a different form of management for the Scottish assets. To facilitate arrangements for the management of the functions by the transferee before the transfer takes place (allowing the new arrangements to take effect immediately on transfer), clause 31(7) enables Her Majesty to make provision by Order in Council in connection with the transfer. This power is exercisable by Scottish statutory instrument and subject to the affirmative procedure before the Scottish Parliament (clause 31(8)). 218 Once the transfer scheme takes effect, the Scottish Parliament will have competence to legislate about the management of the Scottish assets.”
Once Clause 31 becomes law, it becomes part of the Scotland Act 1998 since clause 31 is an amendment to Part 5 of the Scotland Act 1998.
Thus, when it gets Royal Assent it will, in effect (or at least Clause 31 will) be The Scotland Act 1998 (as amended)
Schedule 4 Part I 4(1) of the 1998 Act reads:-
“An Act of the Scottish Parliament cannot modify, or confer power by subordinate legislation to modify, this Act.”
Nothing in the Scotland Bill amends Schedule 4 of the 1998 Act as it affects Clause 31 of the current Bill.
So, Clause 31 is not within the competence of the SP to amend since it is part of the 1998 Act. Effectively Clause 31 circumscribes the devolved power that is effected by the amendment to Schedule 5.
I agree except that it’s only sub clauses (1) to (4) of clause 31 which are amendments to the 1998 Act.
The other sub clauses – including those binding the transferee of the Scottish Crown Estate into the CE Act 1961 and provision for amendment of that by SSI – are not. They will become either free standing provisions of the Scotland Act 2015 or amendments of other Acts, none of which are (or will be) mentioned in Sch. 4 of the 1998 Act as protected from modification by the SP.
The Rural Affairs, Climate Change and Environment Committee meeting this morning (17 June) revealed a few things. It appears, from the evidence of the CEC Head of Legal that the removal of the reservation of management of the Crown Estate in Scotland is indeed intended to give the Parliament unfettered competence to legislate in future. The provisions of 90B and the remaining sections of Clause 31 are there to provide transitional arrangements whereby transferees will remain under the umbrella of the Crown Estate Act 1961 until such time as they are “sprung free” by future Scottish legislation that would release the transferees from the provisions of the Scotland Act 2015. Two points to note as a consequence.
1. Clause 31 remains unnecessary and is, in the words of Richard Lochhead a “dog’s breakfast”. None of these transitional arrangements are needed A much simpler clause removing the two Scotland Act 1998 reservations would suffice and, when they come into effect,would mean that the management would automatically fall to the Lord Advocate (i.e. Scottish Ministers). Parliament can then legislate on decentralisation.
2. Removing the reservation of management of the Crown Estate in Schedule 5 of the Scotland Act 1998 may open the door for the Scottish Parliament to legislate but, crucially, this is only one of the relevant reservations (Schedule 5 Part I 2(3)). Scotland Act 1998 Schedule 5 Part I 3(3)(a) – the revenues – remains in place and, together with the amendment in Scotland Bill 31(11) to Civil List Act, means that the Scottish Parliament does not appear to have competence to amend the destination of the revenues. That is a rather fundamental matter.
1. A simpler clause just removing the two SA98 reservations would also fail to implement the Smith Agreement. This is because it would contain no provision to ensure that paras. 33 (onward sub-devolution from Edinburgh) or 34 (safeguards for UK wide defence, security and energy) of Smith were duly carried out. If I were an English and/or unionist MP – and let’s face it an overwhelming majority of the House of Commons are – I might hesitate before voting for a bill which implemented some of Smith but not all of it.
2. You’re right that para. 3(3)(a) of Part I of Sched. 5 of SA98 needs looking at. I would suggest replacing “other than revenues from bona vacantia, ultimus haeres and treasure trove” with “so far as under the management of the Crown Estate Commissioners”. If an appropriate amendment to that end is made, the Civil List Act point falls away (because the hereditary revenues are no longer reserved, cl.31(11) is not an amendment to SA98 and the CL Act is not included in Sched. 4 of SA98 as protected from modification by the SP).
1. Lord Smith himself is on record as stating that his job was to devolve to Holyrood (Q.137 in Scottish Affairs Committee – see Note 3.). Para 33 is a statement of political intent by the parties to Smith and has no place in the Scotland Bill which is concerned with devolution of competencies to Scottish Parliament. The defence, security and energy issues are already covered by existing reservations and memoranda of understanding as part of the devolution settlement. In other words, Scottish Ministers already have a framework within which reserved matters are accommodated when exercising devolved competencies. The Crown Estate is no different and can be addressed in the same manner. Excluding it from the Scotland Bill is not a breach of Smith.
As regards para. 33 (sub-devolution from Edinburgh), the point is whether the Smith Agreement is:
(1) “the CE will be devolved and the Scottish Parliament will thereafter be able to do – or not do – whatever it thinks fit with it including retaining it centralised in Edinburgh”;
or
(2) “the CE will be devolved only on the strict condition that it is sub-devolved to the islands LAs etc.”.
If it’s the former, then your simple clause would (apart from the para. 34 point) do but if it’s the latter, more is required if the bill is to implement Smith. I think Lord Smith himself confirms it’s the latter in his exchange with Alan Reid MP in the SAC (Q137-138) when they both emphasise that the word in para 33 is “will” [sub-devolve], not “should”.
As regards safeguards for UK wide defence, security and energy interests, are you saying that the MoU referred to in para. 34 of Smith has *already* been drawn up and agreed? If so, is there a link to its text anywhere?
I watched yesterday’s session of the RACCE Committee. Richard Lochhead looked uncomfortable. Perhaps because he’s badly briefed (just because he doesn’t understand it doesn’t make it a “dog’s breakfast”) but I’d argue what’s really going on is the SNP is desperately trying to snake out of para. 33 of Smith (sub-devolution). Lochhead’s terrified of his constituents on Glenlivet being handed over to Moray Council (rightly IMHO) and Mike Russell’s got his vendetta against Argyll & Bute to pursue.