Sunlight or shadows – will the Government’s new public register of land ownership be effective in improving transparency?

by Megan MacInnes, Land Adviser with Global Witness

Yesterday the Scottish Government announced that their solution to the problem of not knowing who is behind the opaque corporate structures owning Scotland’s land was to create a public register of those who control land, (media release here and letter to RACCE here) as part of the Land Reform (Scotland) Bill currently passing through parliament. This step should be broadly welcomed and is a significant step forward from the previous proposals in the Bill to improve transparency of Scottish land ownership.

On paper this announcement appears close to the improvements to transparency of land ownership which I blogged about two weeks ago, but is it really as good as it sounds?

No-one disputes that not knowing who is really behind major swathes of land in Scotland is a problem. It prevents local communities living on or affected by land from contacting the true owner if they have a problem (rather than an anonymous shell company), it prevents law enforcement agencies from investigating crimes and it’s ironic that having won the right to roam, Scotland’s citizens don’t have the right to know who truly controls and makes decisions about the land they are walking on.

In a letter accompanying the Government’s announcement, Minister for Environment, Climate Change and Land Reform, Aileen McLeod MSP, describes their intention to “requir[e] the public disclosure of information about persons who make decisions about the use of land in Scotland and have a controlling interest in land”.

However, the devil is certainly in the detail and there are many ways in which this commitment may not provide us with what we really need to know about who truly owns Scotland’s land. The potential for loopholes and exemptions which would render this register meaningless are substantial.

Most importantly (and let’s get the boring technical stuff out of the way first) this register needs to consist of the “person(s) of significant control” of the legal entities owning land in Scotland. This term is the technical definition of what’s more commonly known as “beneficial ownership” and means that what is registered are the names of the individual people who either own or control land in Scotland. This term already applies in Scotland through a UK-wide register of company beneficial ownership which was introduced in 2015. Adopting this technical definition is the only way to ensure the register will include what we need it to.

This register has the potential to finally shine a light on some of Scotland’s most shadowy corporate entities, for example Scottish Limited Partnerships and the shell company structures used to hide land ownership in Scotland in overseas tax havens and secrecy jurisdictions. Therefore, it’s essential that there are no loopholes or exemptions which these kinds of corporate vehicles can exploit.

The register should of course be free and fully publicly accessible.

We also have questions about process. What the Government’s proposal does is push the more difficult discussions into the next Parliament. So it’s important that the Bill describes the register in robust enough language that it cannot be later watered down, as well as introducing a firm duty and deadline by which the regulations providing for this register have to be adopted.

One major question remains however – why the Government has proposed this register to be separate from the Land Register? My earlier guest blog outlined the reasons why expanding the Land Register requirements to include beneficial ownership appears to be the simplest and most administratively straightforward route to achieving this goal.

But still – what a difference a week makes. This announcement has completely changed the terms of the debate about transparency in land ownership in Scotland and this can only be good. What we need now though are tough ideas and quick thinking to close potential loopholes and ensure this commitment once and for all brings Scottish land ownership out of the shadows.

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.

The story so far…….

Dr Kenneth Brown wrote a guest blog (here) discussing the harassment he faced going about his lawful business at Ledgowan Estate, Achnasheen, Ross-shire. This led to quite a few comments and emails recounting similar such incidents at Ledgowan over the past few year since Andrew Simpson took over ownership of the estate.

This in turn led to the revelation (to me) of the 18 km track that has been crudely bulldozed across the hills under Class 18 Permitted Development Rights whereby developments for agricultural use are exempted from the need for planning consent. Despite recommendations from Scottish Government officials in 2012 that such tracks be subject to normal planning rules, Derek Mackay (Minister for Local Government & Planning) under pressure from farming, landowning and forestry interests, refused.

Since publishing these blogs, more information and insight has come to light and I thank all those who have been in touch.

Agricultural Use

It is now confirmed that the road was built for agricultural activities. A number of hill farmers have been in touch with me. None can see any conceivable use for a road of this length, routing, construction or quality in this particular place. So what is it for? Simpson’s own website implies it is for trout and salmon fishing and wildlife safaris.

A previous application for a windfarm was refused on landscape grounds. A second application for a smaller development of two turbines was submitted and then withdrawn. Andrew Simpson currently has a live application for one 50kw turbine (Ref 12/03182/FUL). How convenient it is that there is already a road built to service it. How convenient also that any opposition to an application for a bigger scheme on landscape grounds is now much weakened by the fact that the road has now inflicted significant damage to the landscape.

Interestingly, SNH concede this fact in their comments in the current application where they point out that “the proposed turbine is located on terrace 2 within the SSSI. We agree that a turbine located here, with no need for additional tracks minimises damage to the main features of the site.” This  remember is a track that has smashed right through Terrace 1 and 2.

Pollution

The unauthorised construction of this track raises questions about pollution. A prominent expert in such matters has highlighted to me the possible issues with drainage, run-off and sediment loading. The road has been hastily constructed in an inexpert manner across numerous watercourses. It is clear that substantial works have been carried out on the loch shore. Have these works ever been approved by the Scottish Environmental Protection Agency (SEPA)?

UPDATE 25 OCTOBER 2013

I wrote to SEPA on 14 October 2013 and asked them,

Could you provide me please with any information that SEPA holds in relation to activities on Ledgowan Estate, Achnasheen.In particular I am interested in the road that has been constructed and, for example, whether the estate has a CAR licence under the Water Environment (Controlled Activities) Regulations 2011 for the water crossings and works by Loch a Chroisg.”

SEPA replied today and told me that they held no information in relation to the track, pointing out that if the watercourse crossings had been “done in accordance with General Binding Rule 6, then SEPA would not need to be involved”. We do not know, of course, whether such rules were followed.

More interestingly, in relation to the works on the shore of Loch a Chroisg, SEPA refused to release the relevant information.

Please note that SEPA is aware of engineering activities in Loch a Chroisg undertaken by Ledgowan Estate in June 2011 which resulted in the alteration of the watercourse. The work was carried out without a licence. SEPA holds information relating to this however the information has been withheld from release at this time under Regulation 10(5)(b) of EIR which states:

’10(5) A Scottish public authority may refuse to make environmental information available to the extent that its disclosure would, or would be likely to, prejudice substantially … (b) the course of justice, the ability of a person to receive a fair trial or the ability of any public authority to conduct an inquiry of a criminal or disciplinary nature.’

The Public Interest Test was carried out in relation to the information to be withheld under regulation 10(5)(b). To disclose evidence in a case prior to it being considered by the Procurator Fiscal, thus putting it in the public domain means the accused may not receive a fair trial.”

It therefore seems clear than an alleged offence has been committed under Section 44 of the Regulations and that criminal proceedings may follow.

The full reply from SEPA is here.

I have written to SEPA inviting them to investigate whether or not the 2011 Regulations have been followed in the construction of the new track.

UPDATE 29 OCTOBER 2013
SEPA has responded:-

SEPA will arrange to visit the site and look into your complaint. Once we have done so, we will get back to you and let you know the outcome of our findings.

 

It appears that the new landowner takes quite a hostile approach to the local community as is evident from this Community Council minute of February 2012 regarding a dispute over pedestrian access along a now disused public road.

The Chairman read out a letter from Helen Christie raising issues about access to Ledgowan Estate, threatening behaviour, construction of hill roads and the access across the bridge. Dave Mackenzie (an employee of Ledgowan Estate) stated he hadn’t stopped anyone and that the estate will abide by the law.”

Highland Council has now issued a Traffic Regulation Order permitting pedestrian and cycle traffic to continue to use this short stretch of the former A890 (council paper and minute).

During 2011, there was considerable disquiet among residents of Achnasheen about the construction of the new track and numerous complaints were made to Highland Council. On 5 August 2011, Dave MacKenzie submitted a Freedom of Information request to Highland Council asking for details of complaints that the Council had received. The Council complied with the request but redacted the personal details of those who had made the complaints. Mr MacKenzie asked for a review of the decision and subsequently appealed to the Scottish Information Commissioner who, in her decision, stated that,

Mr MacKenzie is an employee of the owner of the Ledgowan Estate. He has explained that his request was motivated by the harassment and disruption to the progress of work that he was feeling as a result of the Council’s response to complaints, which he considered to be made by individuals or organisations that appeared to be either ill-informed or motivated by malice. He explained that he wanted to know the identities of those making complaints in order to inform them of the reason why work was being carried out.”

Creepy.

As is clear from Mr MacKenzie’s attendance at the Community Council meeting, he had (and continues to have) ample opportunity to “inform” people of “the reason why work was being carried out“. As for the harassment, disruption and malice which he refers to, let’s note one incident that took place just before Christmas 2011.

A number of residents noticed that their oil-fired heating systems stopped working. Upon inspection, an engineer found that holes had been drilled in their oil tanks, with the the contents seeping into the ground all over their gardens. The police investigated these criminal acts but found insufficient evidence to take further action.

In another incident, a person closely connected with the estate was caught digging a badger sett. Again the police were called but insufficient evidence was available and the perpetrators claimed that they had been looking for foxes.

Earlier this year a black-throated diver was found dead having been “shot by a high velocity projectile”.

The above incidents may have nothing to do with the estate. They may (although it appears unlikely) have entirely innocent explanations.

What’s going on?