Amendment 18 has been developed in response to the committee’s stage 1 recommendations, and will strengthen the obligations on managers to manage assets in a particular way. It will place on managers the obligation that they
“must have regard to the desirability of managing”
Crown estate assets
“in a way that is likely to contribute to the promotion or improvement ... of”
the wider socioeconomic and environmental factors that are listed.
We do not expect, nor would it be good management, to run the Scottish Crown estate at a loss. We want managers to look beyond the balance sheet, but we do not want to tie managers’ hands where it is not appropriate to do so—in particular, since there is such a diverse portfolio and there are obligations contained in wider legislation that managers will have to comply with concerning sustainable development and the environment.
The solution that I have proposed seeks to maintain the value and income from Scottish Crown estate assets while obliging managers to take account of wider socioeconomic and environmental factors in carrying out that management. In fact, Crown Estate Scotland is currently developing tools to help it to understand, measure and monitor better the social, economic and environmental value of assets. That will be used to inform future planning and investment decisions. The intentions are that that will become core business, and that the information will be shared with other organisations with a view to driving inclusive and sustainable economic benefit. Amendment 18 will strengthen the bill, but in a proportionate way.
It is also important to highlight that section 1 of the Community Empowerment (Scotland) Act 2015 requires
“any ... person carrying out functions of a public nature”—
as a manager of a Scottish Crown estate asset will do—to
“have regard to the national outcomes in carrying out the functions”.
The new national performance framework, which the First Minister launched on 11 June, embeds the United Nations’ sustainable development goals, so managers will be required, under existing legislation,
“to focus on creating a more successful country with opportunities for all of Scotland to flourish through increased wellbeing, and sustainable and inclusive economic growth.”
Similarly, the Climate Change (Scotland) Act 2009 places an obligation on public authorities to act in the discharge of their functions in a way that contributes to the Government’s goal of reducing emissions.
I understand that amendment 40 also seeks to strengthen section 7(2) by proposing that the word “may” should be changed to “must”, and that it is linked to amendment 41, which would remove all the wider factors except sustainable development. In my evidence to the committee, I set out the clear imperative to ensure that the value of the Scottish Crown estate and the income that arises from it are maintained, otherwise the net revenue that is paid into the Scottish consolidated fund will be reduced, to the detriment of the Scottish people as a whole.
I also remain of the view that there is a clear imperative to ensure that the value of the Crown estate in Scotland is maintained. Devolution of the Crown estate to Scotland under the terms of the Scotland Act 2016 resulted in the United Kingdom Government’s block grant to Scotland being reduced by the estimated annual amount of net revenue earned by the Crown estate. All the income, minus any running costs, is now paid into the Scottish consolidated fund to benefit Scotland as a whole. There is therefore a public interest in ensuring that the value of the assets is at least maintained. Less money being paid into the Scottish consolidated fund may have a knock-on effect on the operation of other schemes that provide wider socioeconomic or environmental benefits.
We must remember that the bill is not just about management of the foreshore by community organisations, or of the rural estates. It is also about management of strategic national infrastructure—the telecommunications cables, the oil and gas pipelines, the potential for offshore renewable energy, and the rights in the sea bed beyond the 12-mile limit of territorial waters.
I recognise the concerns that have been expressed about section 7(2), which is why I have lodged amendment 18, which will deliver the recommendation of the committee’s stage 1 report, and I am concerned that amendment 40 could have unintended consequences for such a diverse portfolio.
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Section 7(1) will not empower a manager to focus on short-term gain at the expense of longer-term benefits. Such a short-term approach is, by definition, incompatible with a duty to maintain and to seek to enhance the value of the estate as a whole, and the income that arises from it. I am therefore confident that amendment 18 is the right approach and that it will deliver the committee’s helpful recommendation. However, I am happy to discuss the issue further, following stage 2.
That overarching duty would affect the key strategic decisions of managers, but members will be aware that under section 11 managers will be able, for example, to sell and lease assets for less than market value in the interests of
“economic development ... regeneration ... social wellbeing ... environmental wellbeing”
and “sustainable development”.
Amendment 41 proposes the removal of all the wider factors in section 7(2), except “sustainable development”. I wish the reference to “sustainable development” to be retained in the section, but I am concerned that removal of the reference to other socioeconomic and environmental factors would be very unfortunate. It is desirable that asset managers contribute to wider public objectives such as economic development, regeneration, social wellbeing and environmental wellbeing, and removal of those requirements from section 7(2) might act as a barrier to a manager actively considering and contributing to such factors.
Although we all want our natural resources including rural land, the sea bed and the foreshore to be managed sustainably, I do not support amendments 40 and 41. Amendment 40 competes with my amendment 18, which would not tie the hands of managers in taking strategic decisions. Amendment 41 would remove the references to wider benefits beyond “sustainable development” that were supported by stakeholders during the devolution process and in response to the consultation on the long-term framework.
However, as I have highlighted, I recognise the strength of feeling around the wording in amendments 40 and 18. Therefore, I am very happy to discuss the issue further, following stage 2. I urge members not to support amendments 40 and 41.
I move amendment 18.