There is a lot of complete nonsense being spun in the media today about the alleged refusal of Scotland to contribute to the financial support of the Royal family. Front page splashes on the Times and the Telegraph has been gleefully picked up by broadcasters and others. The population  has now been led to believe that Nicola Sturgeon and the Scottish Government are somehow snubbing the Queen and refusing to pay a fair share of the costs of maintaining her in the style to which she is accustomed,

We have been here before.

Last December, the journalist Hamish Macdonnell spun stories in the Daily Mail and the Spectator. I debunked them here.

So what are the facts?

The Crown Estate is public land and the Crown Estate Commissioners a statutory corporation responsible for managing the Crown Estate. The net revenues from the Crown Estate are public revenues which are currently paid to HM Treasury.

The Royal Family is financed by through a Sovereign Grant established under the Sovereign Grant Act 2011. Section 1 of the Act provides that the Grant is paid by the Treasury each year from funds voted by Parliament (the UK Parliament).

The Scottish Government has no responsibility whatsoever to provide any funding for the Royal Family since it is a reserved matter. Scottish taxpayers pay towards the Sovereign Grant in the same way as they contribute to all areas of reserved expenditure.

The sum of money comprising the Grant is calculated by reference to the net surplus revenue paid to the Treasury by the Crown Estate Commissioners. The first step in the calculation (Section 6 of the Act) is to calculate 15% of the revenue in the financial year two years prior.

The money is not paid directly from the net Crown Estate revenues. That would be illegal. The Crown Estate revenues are merely used as a reference point. Other reference points could (and should have) been used.

I suggested at the time the Bill was rushed through Parliament (see here and here) that the profits of the Stilton cheese industry might be a candidate. Ian Davidson MP suggested GDP. George Osborne himself said “I completely accept that I could have brought other mechanisms before the House, but the Crown Estate is a large commercial property company that is run in a pretty conservative way. It is not a bad proxy for how the country and the economy are doing.”

With the proposed devolution of the management and revenues of the Crown Estate in Scotland the net profits remitted to the Treasury will shrink slighty from any given base and thus the 15% will reduce very slightly (Scotland only contributes around 3% of the net revenue).

The UK Parliament and the Treasury are free at any time to alter the formula and the Smith Commission recognised that it might be necessary. Indeed, a statutory review is due in April 2016. The problem they have at the moment is in fact that the Sovereign grant has grown faster than expected due to the London property market and George Osborne and the Royal Trustees are busy negotiating a reduction in the Grant.

The Palace official who briefed the media would, in a more distant age, probably have been taken out and shot. Quite why the Palace wants to pick an entirely unfounded and counter-productive attack on the Scottish Government is not clear.

Meanwhile, confusion reigns at precisely the moment when, with the Scotland Bill being debate in Parliament, we need calm negotiation.

UPDATE 2130

Buckingham Palace has released a statement as follows.

“Sir Alan Reid Keeper of the Privy Purse said today: “Yesterday’s media briefing on the Sovereign Grant report 2014-15 was intended to highlight some of the issues that may arise when the first review of the Sovereign Grant begins in April next year. The comments and observations were about a principle and never intended to be a criticism of Scotland or of the First Minister or to suggest that the First Minister had cast doubt on the continued funding of the Monarchy.

The principle is about what happens if profits from certain Crown Estate assets, such as those in Scotland, are not paid to the Treasury and the impact that may have on the calculation of the Sovereign Grant in future years. This question will form part of next year’s review.

As we made clear at the briefing, Scotland contributes in many ways to the Treasury’s consolidated fund – out of which the Sovereign Grant is paid. We said explicitly that to imply Scotland would not pay for the Monarchy was simply wrong and we accept unreservedly the assurances of the Scottish Government that the Sovereign Grant will not be cut as a result of devolution of the Crown Estate.”

Yesterday the Daily Telegraph published an article (pdf here online here) based on an interview with David Johnstone, the Chair of Scottish Land and Estates (SLE). Mr Johnstone has been a frequent contributor to the media arguing the case on behalf of the members of his organisation. This is all just grand.

However, in his media appearances and in this article he makes a number of claims that don’t appear to accord with the evidence available.

On 2 December 2014, he was interviewed by James Naughtie on the Today programme. I do not have a transcript of the interview and it is no longer available online but shortly afterwards I received two emails. One was from a civil servant and the other from a Parliamentary official. They both asked me if I had heard the interview and if I knew of any evidence to back up his claim. I said I hadn’t but I then listened online. Mr Johnstone made a claim that the extent of absentee ownership of Scottish land was very small. As I don’t have the transcript I cannot be sure of his exact words but the impression was clearly given that absentee ownership of land was very modest. He was not challenged on this by Mr Naughtie. So what do we know?

One study by Edinburgh University conducted 2000-2002 looked only at hunting estates. Of 218 estates that were studied, 66% were owned by absentee owners. This is illustrated on the map below. Another source of data that I am aware of is from a study by Armstrong and Mather from 1983 which examined landownership in the Scottish Highlands which found evidence that approximately 50% of owners live outwith the region. (1)

A study of forest ownership found that 55% of the privately-owned forest area was owned by absentee owners. Research may be limited but it does suggest that absenteeism is not the very modest phenomenon that Mr Johnstone alleged that it was.

Yesterday’s article in the Daily Telegraph contains a further unsubstantiated allegation.

He told the Telegraph that,

..most estates make little or no profit…..

I know of no evidence to support this statement (which is not to say it is untrue of course).

There is very little information on profitability. Scottish Land and Estates conducted a significant study on the economic impact of estates but (rather curiously) chose not to gather data on profitability. (2) In Savills’ Scottish Estates Benchmarking Survey 2013, it was reported that,

Rural assets continue to outperform alternative assets and our survey again records a healthy investment performance on ‘All Estates’

In the year to 5th April 2013 the average Total Return for ‘All Estates’ in Scotland for all Let Property was 10.8%, the sum of a net income return of 1.3% and capital growth of 9.5% (see graph below)

In an interesting observation of the political process, Mr Johnstone said,

many MSPs and some ministers lavish high praise on the estates in their constituencies only to lambast landowners when they are at Holyrood…he said there was a gulf between SNP and Labour MSPs telling landowners in their constituencies they are the “good guys” and their “aggressive” rhetoric on a national stage where all the praise is “forgotten”.

SLE has indeed invited a significant number of MSPs to visit landholdings owned by its members but Mr Johnstone takes a rather naive view of the political process and confuses the role of MSPs as representatives of their constituents and as legislators. An MSP visiting an estate in their constituency is very unlikely to criticise the owner unless for very good reason. As a constituent, they are as entitled as any other to have their views and opinions heard with respect. A good constituency MSP will seek to do what they can to resolve any problems or issues the constituent has. If I were an MSP I would happily visit landowners and seek to assist them in any way I could.

However, MSPs are also legislators and those who are members of the SNP are relied upon to secure support for Government business in the Scottish Parliament. It is perfectly consistent for an MSP to, on the one hand, visit constituents and represent them and, on the other, to speak frankly about the iniquities of the system by which Scotland’s land is held. Winston Churchill put it very well.

I hope you will understand that, when I speak of the land monopolist, I am dealing more with the process than with the individual land owner who, in most cases, is a worthy person utterly unconscious of the character of the methods by which he is enriched. I have no wish to hold any class up to public disapprobation. I do not think that the man who makes money by unearned increment in land is morally worse than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack; it is the system. It is not the man who is bad; it is the law which is bad. It is not the man who is blameworthy for doing what the law allows and what other men do; it is the State which would be blameworthy if it were not to endeavor to reform the law and correct the practice.

We do not want to punish the landlord. We want to alter the law.

Mr Johnstone concluded,

People equate the idea of owning the land with having the ability to release all this money, and the income is all going to come flowing in. But it doesn’t happen – landowners aren’t sitting there stifling investment.

They are doing everything they can do to generate the income in these places. It’s not bloody easy.

If you say so.

NOTES

(1) Armstrong, AM & Mather, AS, (1983) Land Ownership and Land Use in the Scottish Highlands. O’Dell Memorial Monograph No. 13. University of Aberdeen.

(2) See Economic Contribution of Estates in Scotland

 

Last week BBC Scotland’s new Scotland 2014 current affairs programme took a look at land reform. The last time that BBC Scotland ran a studio discussion on the topic in its current affairs TV output was (if I recall correctly) in 2000. Since then BBC Scotland broadcast a documentary (The Men Who Own Scotland) on aspects of land reform in January 2014.

One of the persistent problems with land reform is how the media frame it almost exclusively as an issue concerning communities in the Highlands and Islands. (1) As the recent report of the Land Reform Review Group makes clear, reform in the relationship between society and land involves a wide-ranging agenda including housing, fiscal matters, public rights, and urban renewal. Indeed of the 62 recommendations in the report, 31 deal with urban issues (including some that also deal with rural issues). Community interests in particular are as relevant in urban areas as they are in rural ones.

When the producers of Scotland 2014 approached me to take part in the programme, I emphasised this point. They said that they would be doing filming in the Outer Hebrides and so I suggested that they film me discussing urban matters on a parcel of derelict land at the Waterfront on Edinburgh. The land is owned by a company in the British Virgin Islands. I wrote a blog about it in November 2012. This would have provided the opportunity to talk about offshore secrecy, community rights to acquire and use land, the failures of the existing volume house-building model, the failures of the existing land taxation system, the Community Empowerment Bill’s right to use proposals, majority land assembly etc. All these are topics covered by the proposed land reform agenda and all affect hundreds of thousands of people across Scotland.

This was agreed but in the end the idea was dropped and I was invited on the show as a studio guest with Murdo Fraser MSP. We talked about a very limited range of matters for 3 minutes and 37 seconds. As I tweeted following the broadcast,

(1) For the avoidance of doubt I fully support the community landownership movement.

 

 

 

The image above (click for larger version) shows the missing slide from the presentation on the Economic Contribution of Estates referred to in the Means and Medians blog from last week. (1) It is important because it shows the significant difference between the mean and the median. (2)

In particular it is important because the researchers who wrote the report stressed that in such a skewed sample, the mean should not be used.

It should, however, be stressed that the overall average values are very heavily influenced by the large and very large estates and the median figures for average income and investment are significantly lower.” (4.2.2 pg. 39)

In presenting the findings, the lead researcher, Rob Hindle stated that,

the mean average [is] significantly skewed by the bigger numbers at one end of the spectrum – so don’t do it – it’s not helpful. You need to start looking for the middle point but be aware even so that the middle point ..there are very big differences between the numbers at one end and the numbers at the other end so the middle point is again to be treated with caution

The means and medians are not published in the report for these very reasons. However, SLE issued a press release on 16 April entitled “New Research Reveals Significant Annual investment on Tenanted Land and Crofts by Estates” with an opening line that read,

Rural estate owners are investing an average of £69,000 per year on their tenanted farms and crofts“, new research has revealed.

The release went on to state that average income amounted to £101,422.

The more accurate figures are the medians and, as the graph shows (second set of columns from the left), the difference is startling.

Median revenue is around £22,000 (22% of the mean) and expenditure about £10,000 (14% of the mean) compared with £101,422 mean revenue and £69,145 mean expenditure

The differences for other categories – notably heritage and leisure are even more pronounced.

NOTES

(1) I should emphasise that the report is an excellent report and I plan to blog at greater length on its findings.

(2) The mean of a sample is the total of all the values divided by the number of values. The median is the middle value in a distribution of values. So, for example in a town with 100 houses where 99 were worth £100 each and one was worth £1 million, the mean would be £10,099 (1,009,900 divided by 100). But describing the average house price in town as being £10,999 is obviously misleading. In a skewed distribution, the median is more useful and in this case is £100 (the middle value when all values are lined up from smallest to largest) – in this case a far better representation of the average or typical price of a house.

Two weeks ago, on 23 April 2014, Scottish Land and Estates (the body that represents some of Scotland’s landowners) held its Spring conference at which it published a report on the economic contribution of estates in Scotland. (1) A week before that, on 16 April, it issued a Press Release headlined “New Research Reveals Significant Annual Investment on Tenanted Farms and Crofts by Estates”

It included the results from 143 estates surveyed that were involved in renting land for farming and stated that these had, on average, 11 tenants per estate covering, on average, 221 hectares. Total annual expenditure on agricultural and crofting tenancies amounted to £10.8 million, primarily on repairs and capital costs, equating to £26.58 per hectare and an average total annual expenditure per estate of £69,145. Average income amounted to £101,422.

Douglas McAdam, the Chief Executive of SLE said that,

The figures clearly demonstrate that there is significant investment by estates and our members are willing to invest further if we can create a stable climate that encourages investment. These are averages and investment does of course vary …. However, we are being told by members who do invest substantially that their continuing commitment is being jeopardised by the re-emergence of a potential absolute right to buy for tenants.”

It was clear that SLE wished to emphasise a) how much estates were investing and b) that possible land reform would jeopardise this in the future.

Fair comment.

So it was with some interest that when I came to read the relevant section of the Economic  Assessment report (4.2.2 pg. 39) and saw these figures, I also read a note of caution. The authors of the report write that, “It should, however, be stressed that the overall average values are very heavily influenced by the large and very large estates and the median figures for average income and investment are significantly lower.” (2)

Today, SLE published a series of videos of the various presentations given at its conference. Among them was one given by Rob Hindle (on YouTube here) who was the lead researcher for the economic study. (3) In a couple of slides (around 40min in) he describes the caveats on using economic figures including that the sample is “weighted towards larger estates”, that users should “be confident in the report but use with care” and that the “median is more representative of the sample”.

In particular, he warns that, “the mean average [is] significantly skewed by the bigger numbers at one end of the spectrum – so don’t do it – it’s not helpful. You need to start looking for the middle point but be aware even so that the middle point ..there are very big differences between the numbers at one end and the numbers at the other end so the middle point is again to be treated with caution

So what are the median values?

They are not published in the report. But I spoke to someone who was at the conference who remembered seeing a slide that had shown the difference – the “significantly lower” figures – contrasted in blue and red as an example of why the “median is more representative of the sample”. So I looked for this slide in SLE’s video.

It’s not there.

Did my friend mis-remember? I phoned him up and asked. “No, definitely – it was there. The difference was very stark – not just for tenancy figures but other expenditures as well.”

How stark?”, I asked.

I don’t remember exactly – much lower though – less than a quarter – even less I think in some cases.”

In the video there is one slide (at around 40min) that shows the differences for some of the data. The median number of tenants is 3 compared with a mean of 11, for example. But there’s no information on expenditure and revenue figures.

So was this information in the presentation given at the conference? If it was, why does it not appear in the video presentation?

Maybe it doesn’t really matter. What is important is that SLE misrepresented the levels of investment in its press release by picking the “mean” figure when it knew that the median was more appropriate.

I  have contacted the researchers and asked if they could send me a copy of the presentation. They may, of course need to ask the permission of their client, SLE, who commissioned the report. I will keep folk posted on what transpires.

NOTES

(1) I should emphasise that the report is an excellent report and I plan to blog at greater length on its findings.

(2)  the mean of a sample is the total of all the values divided by the number of values. The median is the middle value in a distribution of values. So, for example in a town with 100 houses where 99 were worth £100 each and one was worth £1 million, the mean would be £10,099 (1,009,900 divided by 100). But describing the average house price in town as being £10,999 is obviously misleading. In a skewed distribution, the median is more useful and in this case is £100 (the middle value when all values are lined up from smallest to largest) – in this case a far better representation of the average or typical price of a house.

(3) I have downloaded a copy of the video for reference.

“Price of farmland hits record high” scream the headlines today across all the media. The BBC, Scotsman, Herald, and local media from the Deeside Piper to the Kilmarnock Standard.

All these stories have two things in common. First, they are virtually identical. Journalists have simply reproduced a press release. Second, they are all inaccurate. What is going on? The answer is that vested interests are successfully capturing the news agenda. In this case it is the Royal Institute of Chartered Surveyors (RICS) and they are on a roll.

Ten days ago, RICS issued a media statement entitled “RICS July 2013 Residential Market Survey” which was widely reported in the press as a recovery in the housing market with rising prices and more buyers entering the market. In reality, the survey (copy here) was a “sentiment” survey based on asking RICS members for their opinion. This is analysed as a “net balance” – a figure between -100 and 100 where -100 means all members think that a variable will decrease and +100 means they all think it will increase. As the small print makes clear, “Net balance data is opinion based; it does not quantify actual changes in an underlying variable”

The vested interest is relevant here because of course members of RICS earn their living by charging fees. In the case of land and property transactions, they typically charge a percentage of the selling price. So the opinion of RICS members is not an objective opinion.

Nevertheless, their Residential Market Survey received massive coverage. So much, in fact that two days ago, the RICS proudly announced that it had generated “our greatest number of media hits ever in one day“. I am sure their members are delighted that their membership fees are buying such good coverage of their own opinions.

So to today’s reports in the media about farmland prices. The BBC report claims that,

“The price of farmland in Scotland hit a record high in the first half of 2013, according to research by surveyors.

“The Land Market Survey by the Royal Institution of Chartered Surveyors (RICS) indicated land values had trebled in less than a decade.

“It calculated the average price of land in Scotland was now £4,438 per acre.

“Surveyors reported the price was being supported by demand from farmers and investors.

“Their report predicted further price increases were likely, with the market “far from finding its level”.

The press release from RICS claims that,

“£7,440* per acre across the UK, hitting a record high for the eighth consecutive period. The cost of land is now more than three times that of the same period in 2004 when an acre cost just over £2,400.”

That asterisk is important. It was not there when I first looked at the press release but was added after I phoned the RICS press office to ask what the following footnote referred to. The footnote says,

* Opinion based measure, £ per acre (based on median surveyor estimates of bare land only containing no residential component, not subject to revision).

Looking at the Rural Market Survey report, itself (which is only available if you register as a RICS site user), things become clearer. The basis for the claim that “prices had trebled in less than a decade” is based upon “an opinions based measure (which is a hypothetical estimate by surveyors of the value of pure bare land).”

It is also a UK wide figure and thus says nothing about the farmland market in Scotland.

The “RICS spokesperson” states, in the RICS media release that,

“The growth in farmland prices in recent times has been nothing short of staggering. In less than ten years we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market. If the relatively tight supply and high demand continues,  we could experience the cost per acre going through the ten thousand pound barrier in the next two to three years.”

What she really means is that the cost of an acre of land according to the opinion of her members. And when she speculates that the cost per acre could go through the £10,000 barrier in the next two or three years – that too is simply the opinion of those with a vested interest in precisely that outcome.

And that trebling only relates to England and Wales, not to Scotland.

Oh, and finally, that £4438 per acre price that the BBC reports the RICS “calculated”?

That’s just an opinion too but reading the press reports today you would not know.

So why does the media give such prominence to the self-promotional opinions of vested interests?

This guest blog is reproduced with the kind permission of the Daily Record.

This land is our land.. so let people have their say

Torcuil Crichton 27 May 2013

ON a rare, dry Friday on the Atlantic coast of Lewis the whole community of Bhaltos turned out to dedicate a monument to their shared past and future.

A brilliant stone sculpture, designed by Will MacLean and Marian Leven, commemorates land raids of a century ago and the recent community buyout of the island estate that will open a new door.

Places like Bhaltos, where the people own the land, are living proof that the land reform agenda is alive and matters.

Someone ought to nail to a fence the message that radical land politics can change people’s lives, over a “Yes Scotland” sign. The SNP government’s Land Reform Review Group was meant to re-engage lost momentum for change in a country where the most important resource, the land, is in the hands of the very few.

Their report is a disgrace from beginning to end. Instead of reigniting the debate, it tries to extinguish land reform. On community ownership it recommends some tinkering. On moving seabed rights from the remote Crown Estate Commission to local control, nothing. On tax avoidance, nothing. On absentee landlords, nothing. On land for housing, nothing.

There is a galling betrayal of tenant farmers across Scotland who put faith in the process. Some of their stories about treatment by modern lairds echo the days of Patrick Sellar.

Distinguished land campaigner Andy Wightman says the cause is effectively dead in the water, thanks to this government.

I understand the frustration.

Alex Salmond has squandered a parliamentary majority, which was a real chance to change the face of Scotland.

He threw the opportunity away to pursue independence, which, as he is at pains to assure us, would change “nothing”.

The SNP have talked constantly about getting control of the levers of power. So why don’t ministers give control of the land to the people who live on it in Scotland?

I wonder how much money Hamish MacDonell was paid to write this blatant piece of PR spin on behalf of the landed elite in the Mail on Sunday on 24 February 2013? It displays such depths of ignorance and ill-informed opinion that one wonders about the veracity of anything he writes as the “voice of Scottish politics”.

I wonder if this kind of rubbish has anything to do with the fact that the editor-in-chief of Associated Newspapers, Paul Dacre, owns an estate in Scotland?

Time to end the myth over Great Scots Land Grab (471kb pdf)

Today’s contrasting images come on the day that over 30 Palestinians died in Gaza. They included the Dallo family in Jabalia refugee camp – that’s right a refugee camp – who lost 11 members when their house was attacked by Israeli rockets (see first image below). The BBC headline over this story is “Death toll jumps in Gaza crisis“. One wonders what the headline would be if 11 civilians were killed in a Palestinian rocket attack in Tel Aviv. “World leaders condemn terrorist atrocity” perhaps?

Israeli missile strike on house in Jabalia refugee camp

Palestinian rocket attack on “Israeli” city of Ashkelon

Other images from today from Electronic Intifada (including demonstration in Edinburgh).

 

The BBC website published a slideshow of images from the current conflict in Gaza. Two of them showed damage caused by Palestinian rockets. None showed the impact of Israeli missiles but after hunting around the BBC website I managed to find one. I also found one from ATP/Getty from the Daily Mail website.

This is what a Palestinian rocket looks like after it explodes. This one landed in a village near the “Israeli” city of Ashdod

And this is the damage these rockets can do – in this case, to a house near Ashdod

Image from BBC website

Image from ATP/Getty published on Daily Mail website in the story about the death of the 11 month old son of BBC journalist Jihad Masharawi (pictured below).

All of these rocket attacks constitute war crimes but why does the BBC only use the first two in its slideshow?