Media | Land Matters

Scotland, the Sovereign Grant & the Crown Estate

24. June 2015 · 12 comments · Categories: Crown Estate, Media, Politics

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.”

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It’s not bloody easy.

25. January 2015 · 279 comments · Categories: Land Reform, Media

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

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BBC Scotland 2014

23. June 2014 · 29 comments · Categories: Land Reform, Land Reform Review Group, Media

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.

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