Net Zero, Energy and Transport Committee

Meeting date: Tuesday, February 21, 2023

Official Report 684KB pdf

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Subordinate Legislation

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Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Amendment Regulations 2023 [Draft]

Agenda item 2 is consideration of a draft statutory instrument: the draft Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Amendment Regulations 2023.

I welcome the Minister for Environment and Land Reform, Màiri McAllan. Thank you for joining us today. I also welcome from the Scottish Government Rebecca Parry, who is a lawyer; Paul Richardson, who is senior policy adviser for land reform; and Fiona Taylor, who is head of the land use and land reform unit.

The instrument has been laid under the affirmative procedure, which means that Parliament must approve it ?before ?it ?comes ?into force. Following the evidence session, the committee will be invited, under the next agenda item, to consider a motion to approve the instrument. I remind everyone that the officials can speak under agenda item 2 but not in the following debate.

I invite the minister to make a short opening statement.

Thank you very much, convener.

I am here to speak to legislation to address the concerns of some stakeholders who are in scope of the register of persons holding a controlled interest in land—the RCI. The policy intention of the RCI is to ensure that there can no longer be a category of owner or tenant where, intentionally or otherwise, their decision making or their control over a piece of land or property is obscured.

As members will know, the register stems from the Land Reform (Scotland) Act 2016. The principal regulations that established the register were passed unanimously by the Parliament following scrutiny by the Environment, Climate Change and Land Reform Committee via the super-affirmative procedure. Members of this committee will also remember unanimously passing amendment regulations in November 2021. I am very pleased to say that the register went live on 1 April 2022, as planned.

Despite the long-running and quite deep scrutiny, some stakeholders have raised concerns with me in recent months about the cost and administrative burden of compliance. I should be clear that there is no cost to make a submission to the register and that the process is fairly straightforward. However, preparation work is involved and, in practice, some within the scope of the register will instruct a solicitor, which, of course, carries cost.

From the engagement that I have had with stakeholders, the administrative burden arises principally where there is a substantial volume of titles and where there is a complex ownership structure. The register exists to try to shed light on and provide transparency on such issues.

I have listened to the concerns and, in response to them, I have laid the Scottish statutory instrument that is before the committee, which is to offer a one-year extension of the period for registration before the penalty provisions come into force. The period will therefore be extended from 1 April 2023 to 1 April 2024.

Extending that period will allow the register to continue with its integrity, and it will also allow a period in which the administrative task can be stretched and therefore ease the burden and spread the costs. I am particularly mindful of the requirement to do that as the third sector and charities face considerable strain just now because of the pandemic, Brexit and the on-going cost crisis. As the third sector and charities work really hard to support people in our communities to get through the cost crisis, I am mindful that I do not want to exacerbate any pressures on them.

I hope that the committee will support the regulations. I am happy to answer questions.

Thank you very much, minister.

Before I ask my question, I remind committee members and those who are watching of my entry in the register of members’ interests. I own land and I am a tenant farmer on other land, so the issue affects me. However, my question is not about me, minister.

Churches have contacted me—I guess that you were referring to them. They were concerned about the cost, not about the matter being complex. They were concerned about the number of applications that they need to make, as each church and diocese will be different. Have you considered that and whether there is any way of ensuring that the burden on them is kept to an absolute minimum?

Yes—absolutely. I hope that the extension that we have suggested will alleviate the burden on the Church of Scotland, other religious denominations and the charitable and third sector, which are caught in the scope of the RCI.

My officials and I have had extensive engagement with the Church of Scotland over months. I have met the Church of Scotland, it has spoken with the First Minister, and officials have gone back and forward to it. It put a series of suggestions to me on how the burden, as it sees it, could be alleviated. For various reasons, none of those suggestions was acceptable. However, I hope that the one-year extension will allow it to spread the burden and the costs. The work will not have to be undertaken in the same time period, which will help it.

There are significant reasons why retaining the Church of Scotland and other religious denominations within the scope of the RCI is really important. I think that the Church of Scotland owns around 6,000 titles in Scotland. That probably makes it one of the largest landowners by title parcel numbers. A lot of its land is still registered in the register of sasines, which dates from the 1600s. Even experienced solicitors can struggle to note title ownership. For all those reasons, it is very important that it is part of the register, but I hope that the provision will ease the pressure on it.

I do not disagree with you. I understand that some churches own considerable amounts of land and that it is sometimes difficult to find out the extent of the land ownership. That is important. Did you consider allowing churches to make one entry for the whole church, or do churches still have to do that individually as a diocese or a grouping within a region?

What I am proposing does not change the provisions as they were. When the controlling individual has to register, they will have to register their associates, as well.

I considered all the options that the Church of Scotland and other denominations put to me. Those included a full exemption from the register and an amendment to schedule 2 of the RCI, which would have created special treatment for “the main Scottish churches”, as they put it. That in itself is a vague term. However, there were other reasons why that was not acceptable, including the fact that that would immediately raise concerns among other stakeholders that were being treated differently from religious bodies. Consistency is important.

I considered all the Church of Scotland’s suggestions, and I continue to liaise with it. I think that that approach is appropriate, and I hope that it will help it.

Thank you for putting that on record. I am sure that all MSPs around the table have had representations on that from various people. That was extremely helpful.

I think that Mark Ruskell has a question.

Yes—and a brief comment.

I was a member of the Environment, Climate Change and Land Reform Committee, which considered the super-affirmative instrument, and I do not remember those concerns being raised then. Quite unexpected concerns have arisen, and it is good to hear that the minister has been engaging with religious organisations and others.

Have any other sectors raised concerns? Is it just churches and some third sector bodies that have particularly complex institutional structures that have raised concerns, or are any other sectors doing so?

The engagement that I have had so far—the quite intense engagement over recent months—has principally been with religious stakeholders. However, I have no doubt that concerns are spread across the charitable and third sector.

Okay. It is good to hear that engagement has been taking place.

Obviously, the principle of transparency in land reform is hugely important. I note that that forms part of the consultation on the forthcoming bill. Can you say a little more about how you will take through the thread of transparency?

Yes—absolutely. Our consultation on the bill has concluded. We are still considering all the responses to that and formulating how we will take the policy forward. I suppose that we are at a delicate part of policy development, and I cannot say too much beyond what was in the consultation. However, the three principal provisions of the bill are to do with making the land rights and responsibilities statement statutory, having land management plans that will allow communities and landowners to collaborate on what land is used for and, of course, a public interest test that will, I hope, inject a degree of regulation and transparency into what is, thus far, a very unregulated market.

Okay. Thank you.

That was a bit of a drift on to the bill that we may see later in this session. The deputy convener has a question.

It is clear that churches are concerned. There are many concerns. The fact that, following the transitional period, criminal penalties will apply for non-compliance is of concern to church trustees. Three specified individuals would have to be named. Churches change their office bearers, as do various organisations, so the anxiety is understandable.

I think that you are saying that you think that the extra year will give them more time to do what you wanted them to do in the first place. I am a bit concerned that there has not been the level of engagement that there could have been. I understand that the churches are saying that they have not had a response since their meeting with you in September. Therefore, I think that there is a genuine issue here.

I recognise the need for openness and transparency in land reform, which I am very supportive of, but I think that there are some practical difficulties. Like many organisations that have come through the pandemic, churches are having to re-establish themselves and so on. Can you reassure us that you will continue to engage with the churches in order to work out a way forward, so that the new requirement does not overburden them or worry them unnecessarily?

Absolutely. I have been engaged with them—I can speak about that in a moment—but I also commit to continuing to engage with them. I do not want the Church of Scotland or any of our religious bodies to be unduly pressured by the new requirement, but I mentioned that the majority of the Church of Scotland’s 6,000 titles are in the register of sasines. Those are church buildings, glebe land and manses. That shows why the RCI is required, but I am not going to make the church’s compliance more onerous than it needs to be, and I hope that the extra year will help.

We have had considerable engagement with the Church of Scotland. It has been engaged right from the beginning, since the passing of the Land Reform (Scotland) Act 2016. The Registers of Scotland held a session with the Church of Scotland in the immediate aftermath of the passing of the 2021 regulations, in order to test the beta version of the website. The issue was raised at the First Minister’s annual meeting with the Moderator of the General Assembly of the Church of Scotland. I met them very shortly afterwards, and my officials and I wrote to the Church of Scotland in November and December, and again on 17 January. Most recently, I wrote to the church again on 16 February, but I will continue to liaise with it.

Thank you.

I am grateful for the explanations. Like other members, I am struggling, because although I recognise that there has been engagement, from what I have read in the press and the emails that I have seen, the churches are saying that there has been engagement but there has not been any change. They are not asking for a delay. They are looking for some reform.

I want to go back a step. The transitional period has been set back a year for everyone. What is the rationale for that? Could the measure not have been brought in to catch larger companies and those that are outwith the United Kingdom? What is the rationale for giving everyone the extra year?

09:45  

It is about consistency. The register is live. Organisations are registering now and will continue to do so. I should say that, with the extra year, the Registers of Scotland will continue to work with stakeholders to support them to make the registrations. Of course, that will fall short of the provision of legal advice, as must be the case, but we will do everything that we need to do to support them.

On your question about companies, one policy rationale for the act, which I was not involved with, was about avoiding duplication. Companies were not involved in this because of what they are required to submit to Companies House. I cannot remember what the name of that register is, but perhaps my colleague Paul Richardson will know.

It is the register of people with significant control. That includes UK companies, limited liability partnerships and Scottish limited partnerships, for example. The idea of the policy rationale behind the original regulations was to stop people having to duplicate information and perhaps conform to different transparency regimes that were achieving the same thing.

Companies have not been involved from the word go simply because the transparency that the RCI seeks to deliver is already being provided by another register in Companies House. Likewise, we are working with the UK Government on the register of overseas entities—there are a number of registers with different names. That work on overseas interests—the point about which is well made—is on-going.

We are talking about a delay, not reform. It is very deliberately not reform, because I want to maintain the integrity of the register and everything that it seeks to achieve. However, I hope that the delay will help, because I recognise the administrative burden that arises from having a number of titles and from the complex structures in which they are held.

Do you accept that there might be unintended consequences? I will not read out the quotes on that issue, because they are quite substantial, but various church figures have said that the new requirement increases the complexity of the process and has an impact on volunteers, capacity and cost. They are very worried about that. From where I am sitting, the delay does not address those concerns. When you look at this in the round, do you accept that there are unintended consequences?

No, I do not. As I have said, we have had extensive engagement with the Church of Scotland. I wanted to meet the church as early as I could to understand what its concerns were and to hear what its suggestions were. I have thoroughly considered how possible it would be to make amendments to the legislation to give rise to what the church asked for, which in one case was a full exemption, and in the second case was a special streamlined part of the register for the main church organisations, as it was put. None of those would have been acceptable. They would have created loopholes and inconsistency. I think that that would have led to challenges by other organisations, which would have said, “Where is our special exemption? What is the justification for this?” All of that would not be proportionate when we consider the land holding of churches in Scotland.

As I have said, I do not want to unduly pressurise any religious organisation. I hope that the extra year will help churches to spread the costs and the administrative work. In the meantime, my officials and I, and the Registers of Scotland, will be there to help them with that.

You say that the 12-month extension follows consultation with various stakeholders and that—you have just said this—you hope that it will alleviate the burden. Has it been reported back from the consultation with stakeholders that the 12-month extension is welcome, that 12 months is the right amount of time and that it will ease the burden and the cost? What is the response from the consultation?

I have not yet had a response specifically from the Church of Scotland.

I am asking about the position more widely, rather than just the position in relation to the Church of Scotland.

We have engaged with stakeholders. You mentioned a consultation. I am talking about on-going stakeholder engagement, which I have had and which I think I narrated in response to Ms Hyslop’s question.

Equally, we have spoken to the Church of Scotland, the property law committee of the Law Society of Scotland, the Scottish Land Commission, the Scottish Property Federation, Scottish Land & Estates and Community Land Scotland. We have reached out to all those organisations and have informed them of our plan to lay the SSI. I do not know whether my officials have had responses from them that give us the thumbs up. I have not, but I am still convinced that what we have done is the right thing to have done.

Forgive me, but I presume that you asked, “Is 12 months the right period to achieve what we are trying to do?” I presume that you went to them and said, “We are trying to ease the burden and the cost. We are looking to extend this by 12 months. Is that the right time to achieve that or is there a better time? Do we only need six months? Do we need 18 months?”

Let me be clear: I thought that the original year was sufficient; the extension is an allowance for the concerns that have been raised with me.

But you did not ask that question during the process.

It has been part of the conversations that we have had.

It has been part of the conversations, but no one has said to you whether they think that it is the right period.

There is always back and forth as part of such conversations. I have not had a set written consultation from which I could tell you, “Here are the responses I got from these individuals,” but there has been an on-going conversation. As I have said, I thought that the original one-year period was sufficient. Stakeholders have come to me and said that they have concerns, and I believe that the 12-month extension is the right way to resolve those concerns. For a number of reasons, I have not been able to take forward some of the other suggestions that were put to me.

I would like to clarify something, minister. Land ownership and restrictions and burdens on land can sometimes be difficult to identify. That is never more the case, I would suggest, than it is with church lands, bits of which may have been given away or taken by the church over a period of many generations. Is your message to them, “Fill this in as best you can,” and, as long as they make what is, as far as they are concerned, an honest declaration, they will be doing what you require and will not be held accountable if it turns out, at a later date, that there are some minor inaccuracies?

I would never encourage anyone to fill out a public register with anything but the utmost accuracy. Four bits of information are required: the details of the recorded person—that is, the owner or the tenant of a long lease; the land details; the ownership details; and the associate details. I would not necessarily expect all the complexities of legal title to be narrated, but individuals should seek legal advice on that. That is not something that the Government can provide.

I think that we will leave it there, unless members have any further questions.

We move to agenda item 3, which? is formal consideration of?motion?S6M-07603. I invite the minister to speak to and move the motion.

Motion moved,

That the Net Zero, Energy and Transport Committee recommends that the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Amendment Regulations 2023 [draft] be approved.—[Màiri McAllan]

Do members wish to make any contributions at this stage?

I think that the 12-month extension is a pragmatic move. It is a wise thing to do for a number of reasons. However, I am less convinced that the engagement with churches has been what it needs to be, particularly bearing in mind the points that have been made about companies and the original legislation, and the fact that there were other means by which the information in question could be sought. It has also been brought to our attention that the Charities (Regulation and Administration) (Scotland) Bill, which is currently going through the Parliament, has a requirement on transparency, whereby trustee information must be included.

It was interesting that the minister set out the four kinds of information that are required. If use could be made of the 12-month period to look at the practicalities involved in those four areas, perhaps something sensible could be arrived at. I think that the worst thing that we could do is not approve the instrument, because we need the time for such consideration to take place. However, we need to take close cognisance of the points that have been made.

The minister is absolutely right to say that we must have standards for everybody and that, if we have exemptions for one group, that can lead to inequities elsewhere. That has obviously been the judgment that has been taken so far, in deciding not to look at policy reform. I think that there might be an intelligent way to address the issue, because many churches are very vulnerable at the moment, and they are helping vulnerable people. In some areas, the proposed requirement might deter people from taking on responsibilities, which is the last thing that we want to do. If anything, land reform is about getting people to take more responsibility and to be transparent, but our churches probably need a bit more support and engagement.

I propose that we support the instrument, but we must keep a close eye on the situation. I will be interested to see how engagement proceeds with the Church of Scotland in the forthcoming year.

I came along with an open mind because it is not a topic on which I am an expert, but I feel a little bit uneasy. I know that the minister said that there would not be any unintended consequences, but Fiona Hyslop has touched on some of the challenges that churches and faith groups face at the moment, given the role that they play in our communities in supporting vulnerable people, particularly through the cost of living crisis. The danger is that the new arrangement could be more complex than it needs to be. I worry about the administrative costs, because legal fees are not cheap. I think that the new requirement will affect some churches differently, but it is a concern when people say that they do not feel as though they have had proper engagement. Therefore, I am a bit torn.

Before I come back to the minister, I would like to say that I think that the words of the deputy convener are particularly wise. My concern is that I would not want to vote against the motion because I would like the extension to be given. I support the motion, but I do so on the grounds that you will continue to engage with churches and religious organisations to make sure that the spirit of the act is being applied without it being to the detriment of what they are trying to achieve. We are in difficult times as far as costs are concerned and, in my opinion and from my experience as a land agent, going through this process will involve considerable costs.

I seek an understanding that, if I support the motion, you will continue to engage with churches, and that your door will be open to considering whether what you are asking them to do is the right thing and is in the spirit of what we are all trying to achieve, which is openness and transparency on land ownership—which, for the record, I totally support.

Minister, would you like to say anything?

I will respond to a couple of points. First, on engagement with the Church of Scotland and other religious bodies, I think I have already said this, but I am happy to reiterate it: that engagement will be on-going. I, my officials and the Registers of Scotland will be involved in that. We are very keen to make the best use of the additional year and to support religious bodies and others through the process. As I have said, we will do that thoroughly. However, I must be clear about the fact that we will not provide legal advice.

On Fiona Hyslop’s point about the charities bill, I have considered that. That is a result of me having sat down with the Church of Scotland and said, “Tell me what you think I can do to make this better.” I went away and considered every option that the church put to me. One of the things that it raised with me was the charities bill, but that is at stage 1. What I can see so far is that it will require the name of the trustees to be registered, but that does not in any way link to the property. Basically, it is that link that the RCI seeks to bridge. We have to make an assessment. We do not want duplication, but we have to consider whether the other register does the same or more than what we are proposing. With the charities bill, my conclusion so far is that it does not, but I have considered the issue.

Thank you. As the motion has been moved, I must put the question. The question is, that motion S6M-07603 be agreed to. Are we agreed?

Members: No.

There will be a vote by roll call.

For

Dunbar, Jackie (Aberdeen Donside) (SNP)
Hyslop, Fiona (Linlithgow) (SNP)
Kerr, Liam (North East Scotland) (Con)
Mountain, Edward (Highlands and Islands) (Con)
Regan, Ash (Edinburgh Eastern) (SNP)
Ruskell, Mark (Mid Scotland and Fife) (Green)

Abstentions

Lennon, Monica (Central Scotland) (Lab)

The result of the division is: For 6, Against 0, Abstentions 1.

Motion agreed to,

That the Net Zero, Energy and Transport Committee recommends that the Land Reform (Scotland) Act 2016 (Register of Persons Holding a Controlled Interest in Land) Amendment Regulations 2023 [draft] be approved.

I thank the minister and her officials for attending the meeting this morning.