 Mae defnyddio gan 22 mân o dwmaeith cwrsiau, Cymru i Gweithredu Cyngro, ac nad yna y mhau ymlaen nhINSgol y gwylch yn y ddiwedd, a dyfodd ar gweithio cyflafol eich ddweud i gweithio'r gwrsiau, mae wedi'n gweithio gyda'r ffordd o'r system yn cael ei fath. Rwy'n cael ei fath o ddiwedd y cyfaf o gyfan, o'r tyfnol ar gynnwys aeth ymddion ar gyfer y cyfan. We also have apologies from Graham Day and welcome Christian Allar to the meeting this morning. The agenda item 1 is a decision on taking business in private. First item today is to decide to take item 3 and 4 in private this morning, whether to consider our approach paper on the Scottish Government's forthcoming land reform bill in private at future meetings subject to formal parliamentary referral. Are we agreed members? We are, thank you very much. In that case, we will move on to agenda item 2. The second item is to take evidence on the proposed evolution of the Crown Estate assets from the Crown Estate personnel themselves. We welcome this morning Gareth Baird, the Scottish Commissioner of the Crown Estate, Ronnie Quinn, Head of Ocean Energy and Energy and Infrastructure Lead in Scotland, Alan Laidlaw, the Rural and Coastal Portfolio Manager and Rob Booth, the Head of Legal Services. I think we'll just go straight into some questions just now because the ground is well trodden, I think, already. The committee has heard largely positive endorsements relating to the role of the Crown Estate as landlords and lease holders, but some stakeholders have expressed concerns about the transition. Can you tell us what you're doing to reassure your stakeholders at this time? If I could take that from reassuring your stakeholders, perhaps it would be best if I asked Ronnie on the energy and infrastructure side and then I'll come to Alan on the rural side. Thank you. The position is that we wrote to our tenants, our main tenants, back in January, explained what the position was to them. I know that I've had a number of meetings with developers between now and then, the most recent of which was last week. We wrote out again at the start, the end of last week, beginning of this week, I can't remember which now, spring people up to date. I've, on the back of that, set up further meetings going forward and had more telephone conversations. It's an evolving and an on-going process just to keep everyone advised as best we can with the process so far. I'm sure Alan will have some comments to add from his side. We've written to all our tenants and I think the key point at the moment is that informal dialogue and interactions through different groups. All the liaison groups continue, so we had the agriculture liaison group last week and they're a really good opportunity to update on progress. I was at the marine cross-party group last night and there's quite a lot of discussion about the process and the future there. I think that the engagement that we're doing at the moment is basically to inform that process to the people who it matters whether it be tenants and families on the rural estate or business operators elsewhere. There's a lot of informal meetings and discussions and a number of stakeholders and customers are coming forward to say, you know, there's important decisions that we've got to take in the future and we need to know a direction of travel and a steer. We're trying to give as much clarity on that as we can, but referencing them back to the process. I know, convener, that some have picked up some issues with the committee and have corresponded with the committee as well. Indeed, in particular, the committee has heard that investments in some of your rural estates are cross-subsidised by profits from other Crown Estate activities. Is this an accurate picture and how profitable are your rural estates in their own right? It's a basket of property assets that we manage and look after. Like all portfolios, there are ups and downs at different times and different uses. It's a fair reflection to say that some estates have capital generation periods, whereas other estates have capital hungry periods for investment. A really clean example of that would be a number of years ago in 1112, when we had significant snowfall in Murray. Massive amount of damage done to agricultural buildings resulted in a £1 million bill for shed replacements in one quarter, needing to be committed. The glin limit estate would never be in a position to generate £1 million in a quarter. Therefore, it was spread across the portfolio, as it would be in that sort of position. Rural estates are capital hungry at times, but equally change of land use creates capital, and that is periodic. Sales of development plots and sales of land and things like that help to fund reinvestment into competitive agriculture, tourism or whatever we are doing. Each different estate has its characteristics of capital requirements and costs, and they will all have different flows. It's quite difficult to take at one point an isolated position on one type of asset. The coastal estate tends to generate revenue more than capital because it is on-going leases rather than sales. It is able to help to cover different parts of the business. The fact that it is a portfolio that is not all eggs in one basket and all the analogies that the committee would understand spreads the risk and allows for management decisions to be smooth. Are you able to reassure the committee that the level of your resourcing and investment in onshore and offshore assets will remain unaffected through the transition period? If I start on the onshore side to continue that side of things, we have a statutory duty under familiar territory to the committee in terms of ag holdings and that side of things to make sure that our assets are fit for purpose and that we continue to make sure that all our safety liability obligations and things like that are carried out. What we are not able to do is start big long-term plans. The Glendale and Levent mountain bike trail was a seven-year project that we invested hundreds of thousands in. We are not able to kick off projects like that at the moment but, as I say in terms of our sort of on-going maintenance and safety liabilities, we are able to continue on that basis. I will say that, from the renewable side, our budgeted spend for this coming year, this current financial year, is in line and is probably a little bit higher than last year and the year before. There is no slackening off on that. There is no likelihood of that slackening off in the next year or two because transition in law usually takes longer than we would think it should do but, even when acts are passed, the process of secondary legislation takes sometimes a year or two to apply and you would be happy with that transition period. We are actually hoping that this can be done as quickly as possible for as much for the sectors in which we work as for the wellbeing and peace of mind of the staff but, we can only really talk for this year and the budgeted spend is in line with previous years. Good, thank you for that. Jim Hume, you had a supplementary. Good morning to everybody. The convener was asking about cross subsidisation of profits within the Crown Estate activity. Is that being interested if you had figures at all on whether there was any cross subsidisation to the south of the border or to the north of the border? I do not know whether you have different figures for national profits. Our annual report will be issued next week on the latest financials and I know that we will send the committee a copy of that so that will give you as good an insight as we are able in due course. It is fair to say that at any one moment in time there will be different flows. The history of the Scottish assets would be in the last number of years on rural and coastal that there would be a net capital inflow to Scotland, an investment rather than an outflow. That would probably be the most succinct way to summarise that over the last probably eight years. Do we have a rough figure or a general figure? It would be in the magnitude of a couple of million a year of inward investment, net of other sales, disposals etc. It has been an inflow of funds. Hume, I wonder if I could just give you a practical example of where that happened. As you know, I am a tenant farmer myself and my first visit up to Glen Livett was after the huge snowfall that Alan referred to. The thing that struck me about it was not at least the huge pouring-in of capital but the facilities for the tenant farmers were not just replaced but improved. There was a real investment going into the state and from my perspective as a farmer it was great to see that. It reflects on the power of a balance sheet well north of £10 billion and the various assets throughout the organisation that permits that at times in a very short period, as Alan referred to earlier. Was that investment merely to maintain assets or was it investment designed to generate future growth? The example that Gareth used is that everyone knows in agricultural terms that a lot of buildings and sets of fixed equipment are beyond their useful life. Taking the simplistic view, you would say that there is a 20 square metre facility being lost that will be replaced by a 20 square metre buyer. That would be a fairly short sighted view. We have always taken the opportunities created by change to look at that and say that rather than replacing a redundant type of building, what could we do in partnership with the tenant and quite often with SRDP etc to lever and more to make the unit for and also there is investment in new enterprises and things like that, so it would be a mixture of both. It is all long-term at this stage and just building on Alan's point, the actual figure for the last published accounts was an eight investment of about £5 million and the energy share of that, as you have picked up, is all long-term patient capital. Do you have any idea of the sort of returns that you might be generating five, ten years down the road following that investment? We would like that return to be made. There are various models in various scenarios and a lot depends on how the energy market and the offshore renewables market develops over the next few years. We have the impact of electricity market reform and the CFD market. There are a lot of unknowns there and a lot of scenarios that we are working with and working through, but it is safe to say that we are a commercial organisation and we would be looking for a return on that further down the line. We are going to look at some of the economic assets at the moment then. Sarah Boyack has a question first. I want to pick up on the issue of whether you have discussed with HM Treasury the position of fork and aired. I understand that it is a major income generator and we are wondering whether it is likely that that would be devolved to Scottish ministers. I am very happy to take that one. We have provided an on-going support to Treasury in relation to ensuring that they are fully cited on what fork and aired is, as regards our indirect investment held via the ELP. We have provided them with the figures and the background information that they need in order to make informed decisions about how they treat fork and aired and how UK Government and Scottish Government treat fork and aired. As far as whether, at this point in time, under the legislation that has been published, fork and aired would devolve, the answer to that is no. It is specifically excluded from the transfer of our functions to Scottish Government. Is there a paper that sets out the reasoning for that? We have provided Treasury with the background information to enable them to make a decision based on what Smith had said as to whether fork and aired was in scope or out of scope under the Smith proposals. Was your view that it was within the scope of the Smith commission? It just seems unusual to have a major piece of property that is actually here that would not be transferred, which generates income. As a lawyer reading Smith, Smith talked about Crown Estate economic assets in Scotland being devolved to Scottish ministers. There is a statutory definition in section 1 of the Crown Estate Act which talks about what the Crown Estate is. The Crown Estate is those assets, as are managed by the Crown Estate commissioners. The asset that is fork and aired undoubtedly is an economic asset in Scotland, but we do not manage it. The underlying asset is not owned by the Crown, and therefore it does not, as a lawyer to my mind, fit within the definition of a Crown Estate economic asset in Scotland, as described by the Smith report. Described as a bit cherlish. It may not be in or out of scope, but it is in Scotland. Does not it set a rather bad atmosphere that such an enormous and visible economic asset is in some sense the Scottish people are being told, no, no, no, you are not getting hold of that? Does not that rather sour this process? I could not really comment in relation to the Government's stance on it and what your constituents would think about that as a proposition, but as far as the technical analysis of where fork and aired as an asset sits within the devolution process. You are an official, let me ask a commissioner. Do you not think that this sowers the process to have a situation where an obvious economic asset is being withheld in the process? Does not it seem like a bit of sleight of hand? I understand the tensions surrounding it, Mr Russell. They have been very openly expressed, very clear, what Robin and his team have been asked to help inform the process is where the legal structure sits around this and it really will be for the two Governments to negotiate it. I just want to make this point and accept the point of the Governments, but I just want to make this point. We have been here before and you remember that we have been here before. We were here with Princess Street Gardens. We were here with the grounds around Stirling Castle. Every time there is a question of assets being accrued to Scotland where they sit, there is always a but in it and this is another but. I do think that it is a very unpleasant but given its value and I think that the commissioners should think very carefully whether they really want to be put in the position of essentially looking as if they are being dogs in the mention. We understand that the partnership is set up under English law under the Limited Partnerships Act of 1907 and therefore it has been dealt with as something which the Crown Estate as a whole has gone into a partnership with a private entity. I am offshore one by the sounds of it but to any way a private entity. Nevertheless, the question is, if the assets in Scotland, do you think that there might be the possibility of discussing the retention of the profits made from that asset in Scotland in this country? From our perspective that is very much a conversation between the Scottish Government and the UK Government to decide how they would wish to deal with those sorts of aspects. I can talk to the structure of the English terms of the partnership if that would be helpful but certainly it is a Government issue in relation to the revenue. I will not try to put you as the practitioners on the spot but it is important to hear how you understand things from where you discussed these with the Treasury etc. Thank you very much. Good morning. Some of the assets held by the Crown Estate in Scotland I'm told have received less attention during the debate on this issue. Can you outline what work and associated resource goes into the management of your interest in Scotland's internal waters like salmon fishing, gold, silver and other minerals? I'm quite particularly interested about gold. There's a gold rush just now I know that in Ayrshire we found gold and even in the north-east of Scotland, the region I represent, there's a gold rush in Tau in Aberdeenshire. What kind of asset are we talking about? What's the work are you doing? The assets that you talk about are probably the assets that actually get very little time spoken about. People focus on renewables, offshore and farms, but there are a number of asset classes such as the salmon fishing and gold that don't actually get a lot of attention. That's in the public view, they still get a lot of attention through my team and our managing agents team. Nothing has changed in terms of the management of those assets for a number of years. We still manage them on a national basis to make sure that they are sustainably worked, if appropriate, and to make sure that they are well looked after. In terms of active gold interests, you've touched on a couple of areas. The most progressed gold interest in Scotland is, of course, at Tindrum, where there's an active exploration and a planning consent being worked through with Loch Lomond and Trussex National Park and a developer who's interested in a commercial-scale operation there. That's really exciting. It's got a lot of hoops to go through regulation wise, but it's an exciting opportunity and economically it's very strongly supported in that area. Where gold is a non-economic asset, where it's a recreational asset, if you like, that can cause some other issues as well. There's a member of my team working very hard on recreational gold panning, working with SNH, Loch Lomond and Trussex National Park and Police Scotland on some issues of environmental damage and concern caused by recreational gold panning. When I say recreational gold panning, I don't mean a plastic pan sitting standing in a river on a sunny day. I'm talking about scuba gear and pumps and erosion of SSI's and salmon beds and things like that. There's quite a conflict issue there. I can guarantee that there's a significant amount of effort and work goes into trying to manage that just quietly. While there's very limited income from it, it's still an important national asset that needs to be managed carefully. The same would go with the salmon fishing's interests, the river salmon fishing's interests. Again, a member of my team is working very hard on the Wild Fisheries Review, on the proposed changes to the boards, which I know all of you are familiar with. There's a lot of work going on there with the community associations that rent at least those waters from us. There's quite a lot of difficult issues coming up from that, which tenants are nervous of and want some assistance with. We're working very closely with them. You're right to say that they don't always get the headlines in terms of people understanding what's being done with them, but I can assure the committee that they are being looked after. Nothing has changed in terms of the period. Post-Smith and we'll continue to look after those assets until such times as the changes go through. Very important national asset. I want to see some of the news. It's looked like that the people who are tending their assets, who are working on them and making profit out of them, are not always people from Scotland. Is it a lot of... When Crown Estate identifies such possibility of developing such assets, does it look at people in Scotland, organisations in Scotland and companies in Scotland to work on it, or does it just sell it off? I would say that in terms of salmon fishing, the vast majority are local associations and local community groups leasing fishing off us and acting as a local custodian, a real force for good in the rivers that they're operating in. Interest in gold probably splits between recreational and that's very much local. People tend to be in people coming into an area and spending money to be recreational. It has its issues. In terms of commercial scale gold development, let's say the UK market and appetite for investing in gold exploration is quite limited and therefore one of our tenants is a Scottish-led organisation but has always found it difficult to receive capital and investment from the UK. They've tended to go to countries where they're more familiar with minerals exploitation and investments of South Africa, Canada and Australia where there's probably more of an appetite to get into that. That's probably where quite a lot of the external interest comes. The Tindrum development is very well supported locally because of the economic impact it will have locally, both on tourism and on jobs. I'm conscious that there's people in the room that are far closer to that development than I am, so they would probably be able to give you an update. Can you try to put some figures on risk assets? What kind of revenue are we talking about? The revenue side of the gold interests in Scotland at the moment is very limited because there are no active agreements that are creating income and we would receive a royalty based on output once that was up and running. On the salmon fishing side of things, there's approximately £50,000 per annum received from salmon fishing's interests but, again, when you put over the amount of work that's done with the team and the investment and time and that side of things, it's certainly not a big money spinner from that point of view. Mike Russell? The problem with gold is that, if I may put it this way, a slow burn is it not? I've been down the Tindrum mine. The discussions have been going on for many years. The mine is not capitalised as yet and indeed has sought capital on several occasions. How do you make a longer term thing of natural assets and would the big issue for Scotland not be not so much the transfer of responsibilities but the creation of a modern minerals act, which every other European legislature now appears to have? We're very used to those long slow burns. You don't invest in farming, forestry, minerals or offshore energy without taking a very long-term view. Ronnie used the phrase patient capital. We're very used to putting in patient capital. All the work that our team do with the developments that you're talking about in terms of gold is about enabling that opportunity to be created. It's exactly the same on the coastal estate where you need activity—I've said this before the committee—that we need a symbiotic relationship with our tenants doing well for us to receive benefit and for that to flow around the system. In terms of a mineral act, there are lots of vagaries of historic positions on different types of minerals. I will leave that to legislators to bring forward a change to the mineral legislation. We are very well versed and used to taking a patient view and helping things happen because we realise that how we set up our agreements and how we deal with companies will have a major impact on whether or not that happens or not. The Tindrum example is a good example where we've worked very closely with the developer through a great deal of years to try to get it to fruition. We've taken a very long-term view on that. I've got one general question about investment to follow on from other questions that have been explored this morning already and one quite specific question that I'll come to if, through the convener, other members don't have further, more broad questions about investment. Of course, we understand that, as a committee, that there's scope for the Cran estate to continue its robust investment in Scotland. Would you like to make any further comment to any of you on what that investment might look like over future years? Cran estate has a fairly focused investment criteria. It tends to invest in areas where it can bring a wealth of knowledge and critical mass. Those areas are prime regional retail parts, London's west end, offshore wind and rural and strategic land. That concentration of investment tends to be funded by the sale of other non-core assets and the creation of a number of limited strategic partnerships that bring in investment both from the UK and overseas. Through the convener, I'll just follow that up. Something that has been raised through this committee before, when you've come before us in previous years, is there any scope through the Smith commission and leading forward to the transfer of powers to explore the possibility of the responsibilities and the remit, broadening to include economic development and social remit, as well as what, Ronny, you've described already? In relation to the new manager, whichever body Scotland decides to take on Cran estate functions in Scotland, I can't see anything in the legislation that prevents Scotland from doing what it wants to as far as those sorts of more social enterprise-focused activities. You'll see within the UK Government draft bill that Scotland is given power to legislate by ordering council before the transfer date to set up those sorts of structures and then post the transfer date full legislative power to do, as it wishes, as far as those sorts of management-based activities. It's also worth talking about the type of activity that Mr Russell asked about and the slow burn, and in particular the coastal and rural estate. All of the activity that we look after and we help and assist is all about enabling things to happen. Our view is very clearly that the social and economic factors on that are very, very important. Some of the committee members were at the aquaculture awards the other day and heard a lot about the aquaculture industry. Indeed, our annual report last year covered a huge amount of upstream and downstream benefits from aquaculture operating in certain areas. I know that the committee has looked quite considerably at the salmon industry, and there's a lot going on there. If you also look at the investments that we've completed in the work that we've done with communities on marine leisure, there's an important debate yesterday in the chamber about marine leisure and some great figures coming forward about the opportunity. I know that Stuart McMillan and Fergus Ewing have both been heavily involved in that. We were talking to one of our operators on a community group yesterday on the Western Isles and said that the direct capital investment that we made a couple of years ago has made £1,000 a week difference to the income of the local shop. The hotel is doing far, far better. Even within the current mandate that we have that people have criticised in the past, there is a huge amount of socioeconomic benefit that flows from the areas that we operate in and the work that we undertake. Again, Rob has been very clear that there's an opportunity for that to be looked at going forward as well. Thank you. Quite a specific question as well, which is complex and I hope that I understand it right. We're seeking clarification on the process as we move forward in relation to the Smith commission and leading to the Scotland bill. What is your understanding in relation to the transfer of powers and assets? There have been some concerns raised with us as a committee and expressed that because the Crown Estates Act of 1961 is not to be repealed as it relates to Scotland, that all income will have to be paid to the Scottish Consolidated Fund even if local communities or local authorities are receiving the income and have control of assets. If that is the case, do you see scope for change in this? I hope that I'm portraying this appropriately. You've expressed it very well. In relation to the position post the transfer date, the Crown Estates Act of 1961 is applied effectively as a fallback to fill a potential vacuum as at the transfer date. If no Scottish legislation has been brought forward to set up the structure that effectively will take on that new role, then a modified version of the Crown Estates Act is applied effectively just as an interim measure until Scotland has had an opportunity to pass that piece of legislation. There isn't, in my reading of the bill, an anticipation of an on-going application of those 1961 act principles to management in Scotland. The 1961 act post the transfer date, as it stands at the moment, will only apply to the Crown Estates Act in the rest of the UK, so Scotland has freedom as far as that particular aspect is concerned. In relation to the consolidated fund point, there is an amendment in the existing UK legislation that says that Crown Estates Revenues, as they would have been characterised in Scotland, would flow to the Scottish Consolidated Fund. A matter for government as to whether that really works for them as far as delivering what Smith has asked for, and I won't presume to comment in relation to that. Through the convener, are there other members of the panel who wish to comment on this at all? Mike Russell? Yes, sorry. You said in your reading of the Scotland Act, that this was a temporary measure until legislation is in force. I have closed 31 of the Scotland Act in front of me. Can you point me to where that is implied or stated? There are two points to note. The first is that within the new 90B that is inserted into the Scotland Act, there is a power at subsection 6 of clause 31, which talks about provision being made by Ordering Council. It is subsection 7, which talks about Her Majesty by Ordering Council, so effectively on behalf of the Scottish Government, being able to pass a secondary piece of legislation ahead of the transfer date to ensure that the infrastructure has been set up. You will have to direct me to this. I am looking for exactly where that is. I am on clause 31. It is clause 31 subsection 7, which talks about Her Majesty by Ordering Council, making such provision, as she considers appropriate for, in connection with the exercise of the transfer date under the scheme under section 90B. Okay, now I see it right. That effectively allows the Scottish Government to pass a secondary piece of legislation. It doesn't really imply that it is going to happen, does it? It allows it. I think that it is really important that we understand what is happening here. With your permission, convener, can I just probe this a little? I think that it is very important, and it has been raised by Claudia Beamish. I think that we need to treat it very seriously. Essentially, what we have here is the transfer of a function. What is the function of the Crown Estate that is being transferred? Can you tell me that? It is the management of the Crown Estate itself. Can you just express it as it is expressed in the Crown Estate Act 1961? It is quite important to understand this, because it is only one thing that is being transferred here, isn't it? That is just one thing that is being transferred, because there is one function of the Crown Estate in paragraph 11 of the 1961 act. Is managing and turning to account the Crown Estate Act 1961? It is indeed. With the function of managing and turning to account, land and other property rights and interests of holding a certain property while a holding does not count here. In those circumstances, that is the only thing that is being transferred. The functions of the commissioners are the core function. There are other activities, powers, restrictions and obligations in the act that will transfer at the same time, but yes, you are right. The core function is the managing and turning to account of Crown Estate Act 1961. Okay, so that gets transferred, that is then transferred. But then the clause 31 says that essentially what will happen is that the functions of the 1961 act will apply to Scotland now and to the actions of those who have taken over the functions of the Crown Estate. That is not the case at the present moment. If I have a small harbour in my constituency which wants to invest in its own future, it will now have to abide by some very complex functions, including paying monies to the consolidated fund that it never had to do before. I mean, let me ask you, as the Crown Estate in Scotland, why didn't you simply say, or did you say to the Treasury and others, why don't we just say, there's a sign, we're putting in our door, we're now out of business, the Scottish Government can take over us, lock stock and barrel and get on with it, instead of essentially trying to tie up the matter in the detail of the 1961 act, which would mean that not much had changed. I'm just addressing a few points in that, if I may. Once the transfer of functions has occurred under the statutory transfer scheme that's envisaged by the Scotland Bill, the assets that we're talking about will no longer form part of the Crown Estate because they aren't managed by the commissioners, so those assets will no longer be a reserved matter under the Scotland Act 1998 Scotland bodies will have a full ability to legislate in relation to those functions, so in your analogy it is open to them, I believe, to effectively have a complete refresh and move on with their new body on that front. The only underlying principle that I guess you could characterise as being constrained is that we have to remember that those assets are owned by the sovereign in the right of the Crown, and the fundamental founding principle of the Crown Estate and the transfer of those functions is that the underlying property in the capital that's generated from that property is not ours, the Crown Estate doesn't own it, it's owned by the sovereign, and that founding principle of the Crown Estate is reflected in what the UK Government has sought to do in the bill as regards any constraints, other than that you have a power by ordering councillor head of the transfer date or by full legislation post the transfer date to effectively set the destiny for these assets for Scotland going forward. You would accept that what we're seeing in the legislation as presently drafted and as before the House of Commons is essentially what I think it could be well caused, a devolution, not a devolution of competence, but merely a transfer of function, because as the legislation is presently stated, if it were to come into effect tomorrow morning then it would be more restrictive in Scotland than it presently is, particularly upon those to whom the function is transferred. Once the transfer has occurred, the functions that we're talking about will no longer be a reserved matter under the Scotland Act. What I'm saying to you is, as the clauses presently are, then if that transfer were to take place tomorrow or the week after or the week after that, then that transfer would result in something that is more restrictive than the present situation. The resulting position in your scenario would be as restrictive as it is at the moment, but I would just repeat the point that that will only come to pass to the extent that Scottish Government hasn't already passed legislation for the discharge of those functions in Scotland. That's the only scenario where those 1961 Act provisions will apply to you. You will understand why some people regard this as overcomplex and unnecessarily complex and that there really should be simply a system that says those are the assets, that's the management, it's handed over now, cheerio. I can't argue against it being complex, it is complex but it's complex for a reason and the reason is that the Crown of State is complex, it isn't just a function, it's also a business and it's land and it's interaction with all of our customers, it has a staff who need to be protected as part of this process and reading this as a lawyer, again, what the UK-based legislation seeks to do is to put structure into the Scotland Bill in order to ensure that those very important interests are being protected, whether they be defence, whether they be oil and gas, whether they be our customers in Scotland and frankly our valuable and highly professional staff in the Bell's Bray office. That's why it looks complicated. Nobody's criticising your staff but your staff, Mr Booth, are one sentence of the clause 31. They're not the burden of clause 31. The burden of clause 31 is, in my contention, the contention of many, overcomplex, seeks to perpetuate a situation that would be difficult and cumbersome to change and it does require some very critical examination at which it's getting at the present moment. Thank you for that. We will ask the Governments, both the minister who's coming here, the Cabinet Secretary and presumably in the Devolution Further Powers Committee, both the Scottish Government and the UK Government, what their take on this particular point is because it seems to be a moot point from what we understand despite the explanations which are absolutely lucid and to the point. We need to move on at the moment but I think we've dealt with that first of all. The transfer of management to Scottish ministers, we continue the question on that from Angus MacDonald. Thank you, convener. Good morning everyone. We're all well aware that the interests of the Crennys state are complex, as has just been mentioned. Are there any areas where particular work is required by the Scottish Government or indeed the Crennys state to ensure a smooth transition of responsibilities? If I could start off, despite setting out what's happened so far to do this transition, from the Crennys state's perspective, it's set up a project steering group and a working group. They've been established and are now meeting regularly. We've set up regular meetings between the Crennys state and the representatives from the Scottish Government and, in particular, Marine Scotland. We've appointed a programme manager, Roy Evans, and he's meeting with those officials. We have had a wider kick-off meeting earlier on this year in March, where we introduced to colleagues in the Scottish Government, we introduced to them the mechanics of running the portfolio, so we had a full de-session where we went through that. We've delivered drafts of heads of terms for our management transfer protocol, a transition MOU, an outline briefing on how the Crennys state manages its assets in Scotland, we've set up a virtual data room, we've identified over 100,000 documents and records, hard copies that will have to be physically transferred, we've identified an additional HR resource and we've appointed someone to work within Bellsbury to help us through this period, and we've also established protocols that will enable revenue from Scottish assets to be ring-fenced and identified for accounting and budgetary purposes going forward. There's a fair bit of work and this is an on-going scenario. We met with officials last week of Scottish Government colleagues there and we're working to make this as seamless as we possibly can, as I mentioned earlier, for the benefit of the industries in which we work. The last thing that we want is any hiatus or long-drawn out process. There are some fairly crunchy decisions that will have to be taken by our tenants going forward and we need to make sure that this transition, this transfer, isn't on the critical path for anything. So are you confident that it will be seamless or as seamless as? We'll try very hard to make it as seamless as we possibly can. Move to the transfer of management to local authorities and others. Jim Hume, to start. Yes, thank you very much, convener. Just regarding the transfer of management to local authorities and others being communities, what issues do you think you consider the advantages and disadvantages of devolution to local authorities and communities? I want to be very clear that that's a political decision to be taken as to where it goes to. I think that the committee took evidence from a number of tenants and stakeholders in two sessions of the week and there's a number of local authority representatives there. We've got really good working relationships with local authorities and they all differ right across Scotland. There's 28 local authorities with coastal interests and you've had evidence from three or four of them. Some of them are very engaged in that process and others are not, so from our point of view we need to make sure that for our customers that there's clarity on what's going to any further decisions about that and to make sure that there's still a strategic sort of understanding of the type of assets that we look after. I wouldn't want to comment on future recommendations and comments that some people have made in terms of local further devolution but I think that we need to make sure that we're clear about where that applies and how it's worked through and that's where quite a lot of representations to us and to you, I think, are coming from is to make sure that there's clarity on that. Again, the marine recreation voting and leisure tourism cross-party group last night was quite a bit of interest to try and establish where that was headed but that's not necessarily a matter for us to comment on. Is there anybody else? Thanks for that, Alan, but that was quite a very so high-level strategic in talking about clarity and all that sort of stuff but I wonder if we could get down to more of the meat, the role we political decisions made on further devolution but if that further devolution happens and I'm sure it will in some form or another, I just wonder if you could identify some of the opportunities and threats really and some benefits that may have or disadvantages that may occur. Mr Hume, I wonder if I could come in on a Scotland PLC viewpoint from this, if you like. Again, coming back to the food and drink industry, the Scottish food and drink industry has identified some search and targets over the next five years, which industry is determined to achieve. Speaking personally, as a primary producer of food, one of the great pleasures I've had in my post is seeing the forward-looking attitude of the primary producers who are involved as Crown Estate tenants. Whatever structure has arrived at post-transfer, for me, let's take my position as a director of Scotland food and drink, there's real concern about the primary production sector to be able to keep delivering to hit the Scottish food and drink members' targets, which have been completely backed up by Government and supported very heavily. A lot of that production, if you like, wherewithal to hit those figures depends on the quality primary production coming out of Scotland. To do that, we need a forward-looking industry. The pleasure that I've had in speaking to our tenant farmers frequently is that they've had a landlord who, with them, are prepared to go forward, take risks, invest and really move in a very forward-positive direction. My concern is that, post-transfer, there is a structure there that allows those forward-looking businessmen and families, businessmen and women, to maintain that upward trajectory. Again, it's for the Scottish Government to determine which pathway that goes, but around the food and drink industry that's going to be of crucial importance. Some of the evidence that we heard just other week there was indicating that certain functions would probably be better done Scotland-wide. There are certain aspects of what you do that operate best at that level. Other functions might operate much better at a very local level. Could you envisage a system whereby both of those things could operate at the same time, some kind of hybrid situation, I suppose, is how I would call it, where certain of your roles would be across Scotland, but maybe there would be a presumption in favour of local management arrangements as well? Thank you, Mr Thomson. The position that you talk about is quite similar to what happens at the moment. For example, for moorings, local management of moorings is much better done at that local level. We agree the strategic boundaries that they operate within and local committees and groups do that management. Again, with the work that we've been doing with local management agreements about communities taking forward projects and interests, that's at the most grass-roots level to allow them to take things forward. At the same time, we support them in positioning and policy terms and in connectivity terms, so marine leisure tourism is a really good example of delivery on the ground from small development trusts, such as Elgar Finlay in here a few weeks ago, looking to do some really exciting projects in Glendale there. That is true local delivery, but we are working very closely with them to understand the connectivity to other projects at the strategic level and we are involved in the national research project on the marine tourism opportunity to make sure that we can inform that back. There is quite a lot there at the moment. I think that, in line with the community empowerment bill and all the direction of travel and all those things, there will be more opportunities for communities to be involved in those activities and the structure that is put in place by the Scottish Parliament and by the Scottish ministers to manage the assets that there are at the moment will have flexibility to do that, as they wish. I see that as an opportunity to make sure that it works, because we believe that it works at the moment and we'd hate to see a loss of that. I don't know if that helps to answer your question, but certainly there's a paper from Cwentyland Scotland, written probably by a former member of this committee who's looking at that side of things and talking about those sort of things. I think that Alex Ferguson would like to ask a question on the same area. I was going to say, I don't know if it answers Dave Thompson's question, but it certainly answers mine, because that's exactly what I was going to ask. Not for the first time, Mr Thompson and I are thinking on the same lines. But I wonder, could I just expand on it a little bit, because you, Alan Laidlaw, quite rightly mentioned the two stakeholder sessions we had here. I have to say that we were given a very positive view of the stakeholders that had of their relationship with the Crown Estate. I think that it would be fair to say that that positivity was based on two main reasons. One was the single entity that people could deal with in the Crown Estate, as opposed to the possibility of having to deal with a multiplicity of local authorities or other organisations. Secondly was the level of expertise that is available through the Crown Estate. Just to expand on your answer to Dave Thompson, I pick up that you believe it is possible to devise a structure that would still be able to devolve a number of responsibilities to further down the chain, if I can put it that way, but still maintain that single entity that people like to work with clearly and the expertise that goes with it. Is that roughly what you were saying? Yes, and I think that looking at things afresh, which would give an opportunity, it would be great to pick up all the bits that work and to make the bits that people have more concerns about work better. My simple approach is to benefit by this change and this process. It will not be simple, but I think that with a bit of thought from people like yourself who are engaged in the discussion and the communities and stakeholders, and I know that there has been a discussion about public consultation and that will have you—I think that that would be eminent with the question. I think that it is fair to reflect, as Alec Ferguson has reflected, that among, for example, the marine leisure stakeholders in my constituency, the Tobormory Harbour Association, among some of the agriculture stakeholders and others, there has been a strong response to any threat to the existing expertise and talent base of the Crown Estate in Scotland, and they want to see that expertise and talent base retained. I think that that is a credit to the Crown Estate in Scotland if that is the case. Secondly, there is an issue about the appropriate level for decisions to be made. Without doubt and with unanimity in my constituency, that level is not at local authority level. There may be a variety of good reasons in our Galen Bute, although that is the case, but more widely, there are reasons for expertise. That expertise does not exist at local authority level. It does not exist in marine planning, for example, at that level. I think that what I would be looking for, and I would be interested in your comments on this, is how you can build upon the success that you are beginning to have in devolving some of your activities to a lower level. Let's take Tobormory as an example, where, although the deal is not done—the discussion about the deal has been quite lengthy—the possibility of a harbour association using the powers of the Crown Estate to benefit their own community, and acting essentially in place of the Crown Estate in that area has been very positive. The potential is good. How do you replicate that? How can you bring it forward a bit faster so that when this business is over and done with and these unnecessarily complex clauses have been sorted and resolved, we might actually have something on the ground on which we can build? I wonder if I could take the overarching picture there, Mr Russell. Much has talked about the Crown Estate assets in Scotland being passed across to Scottish ministers. We will do everything that we can to accelerate that process as transparently as we can. In Allan's phrase, we will seek to have any involvement from the present team that, on day 2, post-transfer management of those estates is right up to speed and delivering for Scotland. You have already heard from Allan and you know fine well in your constituency about the success of those local management agreements, which I hope for the communities has been very beneficial. Certainly from our side it has been an absolute pleasure to get the investment in there on a business-like transaction and seeing the immediate rewards that are coming towards that community. How the management of those assets are devolved and then engaged on is very much a matter for Scottish ministers. All I would say is a repeat that we will seek to progress that transfer as quick as we can. The other point that I would like to make, a lot has talked about all the assets in Scotland. There is another asset there, and you have already generously referred to it as the team at Bell's Bray and the expertise there. My concern, as a non-executive member of the Crown Estate, is to see that the transfer of that expertise and experience continues to work on behalf of Scotland. That last asset in there, which is very seldom referred to, is really important. I know all the criticisms that have come in a variety of directions. I have yet to hear, and I do not think that I will hear, criticism of the expertise and expert base of the team that you have. That is the most precious asset that needs to be carried forward. What I am trying to find out is how that can be best carried forward, dug into local communities so that that is even more effective. The example that you use, and Brian Swinbank has given evidence to the committee, is about community capacity and the appetite and the skillset. Tobermore is on phase 5 and phase 6, being a really good long-term working relationship with the Crown Estate team and managing agents and with Brian. I think to make sure that whatever decisions are made about such a structure shows that that is open for business for communities who have well-considered plans to come forward. We engage with a lot of communities at different stages, right from the micro-idea to the fully-fledged business plan. Mull and Iona community development trust handed us a fully thought-through peer research document last night that my team are busy looking at this morning. That is genuinely a pleasure. Morvan, from the trust there, was here last night at the cross-party group because we met with her at the Community Land Scotland AGM. One of our other stakeholders from Storys-Uist said that if you are entertaining the start of this project, you must speak to Paul Banks and the team at the Crown Estate because they helped us on our project. That openness for business and local management agreements in your constituency in Gia was a very clear, quick win there when the community said that we have got an idea and that we need help to develop it forward. To my mind, as long as that open for business engagement with communities who have ideas, right from the micro-idea to the fully-fledged business plan, is there, with good communities, with good capacity in ideas, things will happen. There is lots of going on in the legislative process with community empowerment and so on that will enable that to happen as well. I think that we should make sure that when all those things hit organisations and requests that they are open to do those, the opportunities are there to be taken. You mentioned the community empowerment bill earlier and I think that that is a good point to make that we have new powers and a new energy going for supporting communities. It really follows on from Mike Russell's point about having a mix of the national expertise being completely available locally but also having that bottom-up access to new resources. That is what we are looking for. The point that Dave Thompson made about hybrid at the start was very good. It is neither a national organisation that we want nor everything necessary, but the local level is combining both. I think that some thought needs to be given to that as you think about how the powers are transferred and how the expertise is retained. I think that that was something that everybody in the committee was keen to see. At that point, I like Ferguson and another issue that is related to— Thank you, convener. It is really to follow up the point that Gareth Baird quite rightly made that one of the biggest aspects of the current status is the expertise that it has and the people that it employs, the staff base that is there. It is really a practical question. Is it possible to say how many of the staff work on Scotland-only crown estate issues and how many work across the UK? The follow-up to that is what are the staff implications of the possible devolution of crown estate. We have 38 people in the Bellspray office in Edinburgh who are obviously directly involved in Scotland. I know from the energy and infrastructure side that there is a huge resource that comes up from our headquarters at New Billing. Ronny, you might like to comment on that. Until now, the energy and infrastructure portfolio within the crown estate has been managed on a functional basis rather than a geographic basis. I have, for example, UK responsibilities for ocean energy. Other people in Bellspray have got UK responsibilities and vice versa with regard to New Billington Place. Within energy infrastructure in Edinburgh, we have about 12 or 13 staff, but we pull on a significant resource in New Billington Place. Although there is a large degree of uncertainty about what new business model or direction will be taken, we are trying to identify how best we can draw on and identify assets within the wider crown estate that can be transferred. That is not complete and will depend largely on how Scottish Government wants to take that further forward and how it wants that resourced. If I may, the draft of the Scotland bill at the moment has a very clear statement in it that says that the sorts of people that we are talking about, the fine staff of Bellspray, will be protected in connection with that and that they will not have their terms and conditions impacted upon by virtue of the transfer. I think that we are anticipating that, as at the point that the transfer takes place, it will incorporate the sorts of protections that you would see in 2P or COSOC, which are legal mechanisms to make sure that people who are in scope, who deliver their activities into Scotland, are effectively protected and transferred, as at that point in time. Thinking about the Scotland bill as such, you must have played some role as a commissioner, as staff, as lawyers in the development of the clauses. I would be just interested to see how much you have been consulted or have been involved in the process of the creation of the clauses that we have before us now. The starting point in relation to that question is to say that obviously the bill itself was drafted by Parliamentary Council on the instructions of Cabinet Office and Treasury. We have played a role, along with other interested stakeholders in relation to clause 31 specifically, in ensuring that decisions that are being made are being made in a way that is informed, that is aware of what we are as an entity and to ensure that all of the technical description of the complexity of ourselves as an organisation, which we have spoken to already, is being worked into and recognised in the approach that it is taking. Have you had any dealings with the Scottish Government during this process? I have had no direct involvement with the Scottish Government in relation to the legal aspects of it, which is probably reflective of the fact that we are one beneath where that conversation is taking place. We are a stakeholder who is informing. Our Scottish Government focus today has very much been on the practical, the good work that Ronny and Alan and the team are doing in relation to engaging with their counterparts within the Scottish Government to focus on transparency and clarity on that process. The commissioners have presumably been dealing directly with the Treasury in the process of the creation of the set of clauses. We inform Treasury, yes. And the commissioner, have you been involved in the processes? No. So it has not been at your level either? I think that we have been informed about the progress of the process. As Rob said, our major job here is to inform both Governments about the Scottish assets, about the complexity of them and just so that they make their decisions on the back of that. Can I just be clear about that? You said that the organisation at your level had had no contact with the Scottish Government about the detail of that. In relation specifically to the drafting of the Scotland Bill? Yes, specifically to the legislation. What is your level? My level is the technical level. Is it technical level? Do you work in London or...? I do work in London. So at a technical level in London, any contact that you have had about the drafting of section 31 of the Scotland Act has been with the UK Government, with the Treasury? Yes. But not with the Scottish Government? No. Thank you, convener. Has at any point the Scottish Government contacted yourself regarding the Scotland Bill? Speaking for myself now, not personally. We have run round a lot of the houses. We have looked at baskets that are not basket cases. We have looked at the whole interests that the Crown Estate in Scotland has in a very positive view. We are obviously interested in teasing out how we can transfer the assets easily and make sure that they work. I think that you have given us answers that help us along that line. Thank you as witnesses. It has been very good of you to be here. I am sure that we will be seeing more of you in the future, hopefully as a process is accelerated and we get on with the job of earning money and developing the economy. Thank you very much all of you just now. We will take a short recess. So continue with agenda item 2 and welcome back to meeting everyone. I will continue to take evidence on the proposed devolution of the Crown Estate assets and welcome the Cabinet Secretary for Rural Affairs, Food and Environment, Richard Lochhead, Linda Rosbra, director of Marine Scotland and David Mallon, head of Marine Environment, Scottish Government. Good morning to you all. I would like to kick off a question about this considering if you can, any meetings that there have been between the Crown Estate and the Scottish Government and between the Scottish Government and the UK Treasury on the issue of the devolution since the Smith commission reported. Have there been any tripartite meetings or have there been any bilaterals? There have been several meetings clearly both in the context of colleagues alongside me who have been dealing with the Crown Estate directly over a long time and of course at Deputy First Minister and First Minister level with the UK Government over the wider context of the Smith commission of which the Crown Estate devolution is a key part. So many of the meetings so far have been at official level but clearly the Deputy First Minister is engaged directly as is the First Minister. Well it seems as though the Scotland Bill has not taken on board any of the recommendations by the Devolution Further Powers Committee report whilst this may be a timing issue, members here are concerned and we'd like to explore what the Government's view is. Do you believe that the Scotland Bill delivers the Smith commission outcomes in relation to the Crown Estate? Well no I don't and what I'd like to say is that there are a number of complex issues posed by the devolution of the administration of the Crown Estate and the Scottish Government has made a clear case for the devolution of the administration of the Crown Estate in Scotland and of course that's been supported by the Scottish Parliament but most importantly that is also something supported I believe by the people of Scotland in order to promote accountability, transparency and to prevent the leakage of valuable revenues from Scotland to the UK Treasury and what the people of Scotland I think expect from the Smith commission's proposal is that we'll modernise the management of our key assets to ensure they deliver benefits for our country and are managed in the public interest and whilst we're pleased of course that Smith commission recommends a transfer of the current state management revenues to the Scottish Parliament I have to say in response to your question unfortunately the Scotland Bill goes against the spirit and intention of the Smith commission proposals I honestly believe we've been presented with a dog's breakfast by the UK Government it's too complicated and includes legislation and reserved activities that in the terms of the Smith agreement should be for memorandums understanding it also limits the ability of the Scottish Parliament to establish a completely new framework in some of the areas where we want to do that in relation to the Crown Estate assets so clearly we don't believe the proposals below us or anywhere near satisfactory and they do go against the spirit and intention of the Smith commission Jim Hulm? Thank you convener you seem dissatisfied with the Scotland Bill and the way it's going forward we've just heard from Rob Booth head of legal from the Crown Estate who has in his own words been working with the UK Government on that bill with regard to further devolution of the Crown Estate I asked him the question if the Scottish Government if yourself had been in touch with him himself or themselves the legal and he said no I just wonder why not well clearly the Crown Estates are in regular meetings with the Scottish Government at official level the question I think that's more appropriate is whether the UK Government and the Scottish Government are speaking to each other about the Smith commission this is a bit negotiation to fulfil what was promised by the Smith commissioners expected to be delivered through those proposals therefore the conversations over the future of the Crown Estate Scotland are clearly between the UK Government and the Scottish Government these conversations and negotiations are taking place at the highest level with the Crown Estates future being at the heart of these negotiations so clearly the first minister and the deputy first minister I think is again about to meet the Crown Estate shortly have been at the heart of these negotiations and that's the right and proper level where they should take place the Crown Estate clearly are non-political and have a job to do in terms of the management of the assets the negotiations and discussions over devolution are between the two Governments so therefore you stated it would have been inappropriate for the Scottish Government to discuss with the legal the legal team at Crown Estates regarding the Scotland Bill and what yourself would want in that well with all due respect I do think that's a bit red herring because this is a discussion and a negotiation between two Governments the Scottish Government and the UK Government in relation to the Scotland Bill going before the House of Commons which we want to deliver what was promised and agreed in the Smith commission and that's the right and proper place for these discussions to take place as I said before there are many many meetings between all the various teams within the Crown Estates over the devolution of the Crown Estate between officials and Crown Estate officials but the clarity of the negotiations are at ministerial level okay thanks and Mike Russell yes thank you cabinet secretary a clause 31 sub paragraph 7 of the Scotland Bill gives the Scottish Government the opportunity to put in place a scheme of activity or management for the Crown Estate in Scotland if it chooses to do so according to Mr Booth again prior to the devolution of the Crown Estate coming into place and Mr Booth's argument and I raised with him the question of this absolutely monumental complexity of this clause which is utterly unnecessary I think in most reasonable people's opinion and his answer was to draw attention to 31 7 to say that the Scottish Government was now entirely free to put in place its own arrangements has the Scottish Government started the process of putting in place some drafting for a scheme of arrangement after the devolution of the management of the Crown Estate has taken place the focus of the negotiations with the UK government's now are over the draft clauses that we have put forward as a Scottish Government for the devolution of the Crown Estate to make it more simple and more effective and to deliver what was promised with the Smith commission proposals and therefore that's the negotiations taking place right now as we believe the very simple tabling of the amendment to be agreed hopefully by the UK Government of removing the reservation over the management of the Crown Estate assets is the simplest and easy way to devolve that responsibility to the Scottish Parliament the clauses that Michael Russell refers to as he referred to himself as monumentally complex clearly should be replaced with more simpler clauses and that's our focus of the negotiations at the moment except that if there this that does not take place then essentially what will happen is that some of the things that are presently not subject to the Crown Estate legislation of 1961 become subject to that legislation for example payments into the consolidated fund a whole range of matters become subject to legislation which is not presently it's written does not run in scotland and for certain things and that will actually make the situation worse rather than better in certain circumstances with that in mind presumably you have i'm sorry to use these terms a plan a b and c in order to ensure that those who are affected are not adversely affected well clearly there's various stages the negotiations taking place and you're right we'll have to respond to each stage as we enter that stage of negotiation but the stage we're at just now is the fact that we have within the UK government's clauses a very complex arrangement that does not devolve the management of the crown estate assets in scotland and there are potential complexities that would indeed make things worse because if you look at the restrictions that are placed upon devolution by the UK government's current proposals there are so many checks and balances and restrictions and carve outs built in to what's being proposed that it does not amount anywhere near what we would regard as a spirit and intention at the smith commission that is the proper and full devolution of the management of county state in scotland so you will be ready for any eventuality as i know you always are i'm sure we'll be ready for any eventuality but we're trying to prevent some of cutting in the first place certainly yes i have a supplementary to that particular question because it could i go back cabinet secretary good morning sorry could i go back to the point that mr russell made when referring to what mr boothard said told us in the last session about the ability of the Scottish government to put in place a structure to allow effective management as i understand it of crown estate assets before the transfer takes place and with respect i don't think you answered his part of that question because it seems to me whatever the complexities that exist which will hopefully be ironed out i don't know what the chances that happening are but you know one that one hopes for the best but it seems to me somewhat irresponsible if the Scottish government has not already begun to look at what it has the power to do before transfer if it's not to be caught on the back foot when that transfer actually comes okay well clearly i wasn't there to hear the evidence given by the crown estate and i'll reflect upon what they said to the committee and there's a lot of work taking place between the crown estate the Scottish government but as the negotiations are taking place between the Scottish government and the UK government over the scale of the devolution of the crown estate of course within the existing clauses in the UK government there is some devolution over the management of the crown estate assets in scotland the key point from the Scottish government's point of view which i believe is a key point supported by the people of scotland is its partial devolution of the crown estate to scotland and that is not what was agreed within the smith commission or what is expected by the people of scotland so yes there are some proposals there of course that give us some more devolution because we don't have any devolution of the crown estate at the moment and that is certainly the case but we can't accept partial devolution of the crown estate assets there are so many powers within the draft clauses to give powers to the treasury to give powers of direction to add in further restrictions over and above those already within the draft clauses and therefore you know everywhere we turn there's more checks and balances and restrictions and what's actually devolved to scotland. America one final point convener i accept that and i accept your arguments and i accept also that that is for negotiation between government and government but as a member of this committee i am slightly concerned that if there exists a power or if there will exist a power for the Scottish government to act to remove some of the criteria and constrictions that have been talked about i am quite concerned as a member of this committee that the Scottish government doesn't appear to be exploring the potential that exists within that at this point in time. We have discussions taking place with the crown estate over the operation of the crown estate in scotland irrespective of the scenarios but what i'm trying to explain here is that our absolute focus is on a very clear chain of events that are taking place in relation to the evolution of the crown estate. We have the debate over the Scotland bill going through the UK parliament at the current time our absolute focus is to make sure those deliver the Smith commission proposals that's the absolute focus for these subsequent weeks thereafter we will then have a scotland bill agreed and prior to that i should say to committee that within a matter of the next few weeks i intend to set up a stakeholder forum in scotland with all relevant parties to look at the interim steps we'd want to put in place to give continuity and stability in scotland as the transfer is prepared and then of course we'll have to look at what the overall framework and model will be for a scotish organisation in due course so there has to be interim arrangements put in place whilst we await the legislation to go through the house of commons giving the final devolution of the crown estate to scotland. Okay thank you i think we'll be coming to some of those aspects later in the winter. Yes i guess. Claudia Beamish. Good morning cabinet secretary and two colleagues. I raised this issue which has now been pursued with you by Mike Russell and by Alex Ferguson earlier with the crown estate and you will be aware that the even if the assets are transferred or the management is transferred to local government level and or to communities that the income as things stand would still go back to the crown estates and i think it would be very helpful if we could understand if not today then from from yourself in the near future what the timescales are likely to be in terms of the possibility of bringing forward scotish government legislation prior to the enactment of the scotland bill in order to appropriately take forward the issues that have been raised this morning and i wonder if you can highlight when we might be able to hear what that possibility will be but there is a serious concern about if that doesn't happen where we will be left with the scotish consolidated fund and with a range of other complex issues. Clearly we're seeking clarity from the UK government on the impact on the consolidated fund and at the point of transfer we do of course expect the consolidated fund to be affected but at the point of transfer in terms of the revenues from the crown estate in Scotland thereafter we'll have to just pin that down and make sure we've got absolute clarity as to what happens with future revenues. In terms of the timetable clearly we have an expectation that in early 2016 the process will be completed for the scotland bill and thereafter there will have to be secondary legislation that we expect and that we expect to be relatively soon thereafter but I can't sit here and give a date because it's all in the hands of the legislative process in the House of Commons and thereafter you're quite right that that would give us an ability to put forward legislation in the Scottish Parliament. Standing as cabinet secretary from the evidence earlier today that there could be the possibility of legislation in the Scottish Parliament so that things are more seamless before the act comes into if it does indeed go forward the scotland bill to become an act so that we don't present difficulties for people of scotland in the transfer process? Well that's right I mean I refer to in response to Alec Ferguson's question the fact that we do need an interim stage in this process because the long-term decisions that will be taken in Scotland over the management of the county states assets in scotland there has been interim stage we want to transfer the county state as an ongoing concern and an entity to give stability and continuity and as that stage takes place as I said we're going to set up a stakeholder form within a few weeks and if there are some issues that have to be addressed through amendments to 1961 act through the powers you refer to we would do that as an interim measure perhaps to change the remit of the county state slightly in scotland or whatever that may be whilst we in parliament go through the process of long term decisions over how to manage the assets in scotland but from a point of view of giving continuity and stability to business in scotland particularly the offshore renewable sector we do need that interim step and yes you're right we would potentially use the ability to amend the 61 act to make some adjustments to the county states functions in scotland but we still wanted to be an entity and a going concern will be still a county state in scotland thank you reverting to the actual scotland bill at the present time what amendments does the scotland Government think are necessary to this bill to make your case well as I said in response to Michael Russell at the beginning we are proposing removing the reservation in relation to the county state in scotland that's the simplest clearest way to devolve that responsibility to the scotland parliaments I also refer in my answer that what we have before us now is a dogs breakfast full of restrictions full of powers that are left with the UK sector of states and also with various carve outs in other words some issues that should be devolved to scotland which we believe are assets in this country would still remain a reserve power so therefore the only way around that is to be clear cut and to remove the reservation yeah well probably come to some of these economic assets in in the near future but thank you for that Angus MacDonald your question I think about stakeholder interests yeah thanks convener good morning cabinet secretary we heard from a few stakeholders previously that there's some concerns regarding the transition period what's the Scottish government doing to to reassure the county state stakeholders through the period of this period of transition well clearly we do share some of those concerns and that's why we think it's absolutely vital as an interim stage however long that will be in place for we certainly need it and it'll be a considerable amount of time we have a number of staff based in scotlands and they are doing a job at the moment in terms of managing the assets in this country we also have staff in london who are part of the county state but work in scottish issues so clear is the discussions taking places now and what happens in relation to the roles based outside of scotland that work in scottish assets and we have to come up with a solution because we want continuity for the foreseeable future to give that stability to business and communities so that interim stage very important so are there any plans to engage with stakeholders for example we heard from the tenants at the liberty state who had some concerns is there any engagement process planned during the transition period so happens i met about 70 tenant farmers my constituency from the crown state rural state so i'm well aware of their their views on this issue however what i will be announcing in a matter of weeks is a forum of all the relevant people who've got an interest in the future of the county state assets in this country particularly the business community and the the communities themselves and therefore i will at first hand their views on the way forward it's my intention to set that up soon and then within a few weeks we may hopefully have a slightly better idea of the direction of travel in terms of devolution and we will then begin to discuss their concerns and making sure we address them and how we can have the county state continuing as an entity in scotland and as a going concern to provide that continuity okay thank you and what plans do you have to ensure that the voices of stakeholders across the onshore and offshore interests of the county state will continue to be heard well clearly i want to involve them and the representatives in the forum but my message to them is that we absolutely recognise the need for continuity and certainty and that's why we will minimise disruption in the foreseeable future and to go understand the long-term direction of travel for how to manage the estates and the public interest in scotland okay i'm sure i will give them some comfort thank you Sarah Boyack the economic assets that have been touched on i think thank you convener cabinet secretary we took evidence earlier this morning about the whole issue of economic estates and assets and you were just talking there about their reservations and carve outs you're wondering what your view is on the the issue of economic asset transfer from the crown estate okay i just want to make sure i understand your terminology correctly in terms of economic assets just the general economic assets of the well particularly view on fort canary yes okay i thought you might be going there well needless to say and i would expect the committee would share some of my concerns here is that we're very unhappy with the definition of the Scottish assets that would be transferred under devolution you could be forgiven for thinking there's some kind of exercise here in concealing assets so they don't have to be transferred to scotland it's our view that fort canary is a scotish asset and therefore should be included in those assets that are transferred through devolution and we are unhappy with the complicated arrangements that appear to be in place that seem to be used as a hook to define that as not a scotish asset my understanding is the crown estate share of the fort canary assets is around 100 million pounds perhaps generating about 30 million pounds of revenues in the last eight years or so these are our estimates i can't guarantee there's exact figures because you'd have to get them from the crown estate which is not always easy due to the lack of transparency in some of these issues however that is a substantial asset and it should be included in the devolution of the assets of scotland and i can just give you one supplementary point there one reason why that's quite important is you may want to ask questions on cross subsidy between different assets within the crown estate scotish portfolio and clearly if a major asset that fort canary was taken out of the scotish basket of assets that removes you know a major source of income that could otherwise help in terms of the plans of the future of managing the estates in scotland i think we do need a bit more information in the detail jim you asked a question about uk transfers to scotland earlier and i think it would be useful to get that information i did ask one of the crown estate officials in the margin to the meetings for the detail on the fort canary issue so that we could actually see the numbers in front of us so as i understand that you're right cabinet secretary it's part owned by an english limited partnership which the crown estate is an interest in and the other half is owned by a jersey based unit trust so it would actually be interesting to get some more detail on this have you had those discussions with either the crown estate or the uk government to date we are feeding that issue in amongst many other issues so it has been raised and we will continue to raise it okay thank you thank you mike russell it's just quite important to to to put this on the record not least because historical perspective is sometimes quite good you will recall i think that at the time of devolution when the original assets of crown estate were passed to the scotish parliament a number were left untransfered including a sizeable piece of ground in near sterling including in the environs of sterling castle and what might be best called a ransom strip in prince's street gardens and it took a very considerable time effort in the case of sterling i believe quite substantial sums of money to resolve the issue i think we are back again at this extraordinary reluctance of the kind of state or whoever is responsible for the kind of state and the treasury looms large in all the drafts of the the clauses that one has seen essentially trying to hold on to as much as possible and people should recognise that this is a modus operandi when we're discussing the kind of state in scotland i think that's a fair summary of perhaps what we're facing at the moment and clearly i think it's unreasonable for the crown estate to start categorising scottish assets into different groupings because of different financial arrangements and definitions some of which are scottish and some of which are not scottish despite the fact that they're in scotland so clearly i think from the public interest point of view and i think the public of scotland expect us is that the crown estate activities in scotland should be devolved is there a case for looking at the limited partnerships act of 1907 under which this partnership structure of the crown estate and Gibraltar holdings or whatever it is has been laid to have a version of that in scotland or to see part of that act looked at in terms of the asset that has been created under it i respect your knowledge of the 1907 legislation and therefore have no reason to question the point you make convener however i do believe that you know we should have a rational negotiation with the UK government here and these games are unhelpful we should not have to fight for every inch of devolution when it comes to something that was agreed in Smith commission indeed it doesn't mean the end of the partnership act of 1907 to know when somebody is at it indeed but at least it's more recent than the battle of the standard anyway which we dealt with in another context in this committee with the cabinet secretary indeed but the views on that are perfectly clear further on this point Claudia Beamish thank you convener cabinet secretary could we as a committee explore a bit further what the Scottish government's view is on the proposal that the crown estate will be able to invest in Scotland after the scheme for transfer has been exercised and that revenues generated from such activities will flow to the UK treasury well our view on that issue is that whilst we clearly cannot prevent anybody outside of Scotland investing in Scotland for the purposes of our negotiations with the UK government we think it be far simpler that the crown estate in Scotland is the crown estate body it's active in Scotland and the remaining crown estate the rest of the UK is active in the rest of the UK and that is clear cut and that is proper devolution so we clearly as I said before we can't stop outside organizations investing in Scotland we want to do that but in terms of the negotiation over a UK body part of which has been devolved we think it's right and proper that the activities of each body are restrained to the administration of which they work right thank you and there have been arguments put forth by the crown estate in previous evidence and in previous years that we've taken about for instance the issue around marine renewables that a lot of investment has come from other parts of the UK into into Scotland for for that purpose and I wonder where that would sit I'm listening carefully to your answer already but just for some sort of clarification on a Scottish Government view on money coming in from other parts of the UK from the crown estate to support activity here well clearly the current arrangements are that the revenues from Scotland go into the the UK treasury and therefore any substrate comes back again it clearly is funding that's gone from Scotland in the first place it's quite difficult to untie that as you can imagine because there's over the years there's been quite a lack of transparency with the crown estate's finances and their arrangements so it's difficult to give answers on these issues one of the reasons why we do want devolution of the crown estate is to give that transparency and accountability that's not there just now so there'll be all kinds of complicated arrangements but what we do at the moment is that Scotland pays a surplus from Scotland from our assets into the the UK treasury and clearly under devolution that would stay in Scotland now I'm not going to sit here and say we don't want to cooperate of course if the crown estate in Scotland and the crown estate in the rest of the UK wish to cooperate or work together on certain issues there may be a case for that but in terms of the actual arrangements put place for devolution it's important that the activities of the crown estate in Scotland are focused in Scotland and the rest of the UK's crown estates focus the rest of the UK I understand respect what you're saying I just recall from previous years the argument made by the crown estates that to kick start certain industries such as the offshore renewables that money was bought in from other parts of the UK from the crown estate assets and I'm just trying to sort of tease that up for that well that's an argument that's perhaps put forward by the crown estate of the UK government but it's an argument which we'd like to see backed up with all the relevant figures of what Scotland's paid into the pot over many many years because the accounts only go back a few years but we've had the crown estate for many many years therefore until the those making that argument to give us the exact accounts and financial arrangements have been in place where the money's come from where it's been invested going back many many years we can't really answer that argument properly thank you okay I think we'll move on to the transfer of management now christianne allard thank you very much coming in good morning you still morning first of all maybe as the cabinet secretary about one of the point you said earlier on about the forum of stakeholders maybe it'd be good for his committee to have an idea how wide remedy would be and who will be the people involved in the forum well clearly I'm just giving thought to that just now and I'll make an announcement in a matter of weeks as to who we will invite to the first stakeholder forum and any ideas that the committee have following your evidence session would be most welcome there are some obvious stakeholders we want to speak to and we want to have input from and the tenant farmers were mentioned of which there are many on the rural estates and also the offshore renewables sector and the various other organizations who have a very close link to existing activities of the county state in scotland. Regarding the transfer of management to Scottish ministers can you tell the committee how the Scottish government is ensuring that the implementation of marine planning is taking into account the management of the crown estates marine assets? The crown estates have had input in Scotland to marine planning as far as I can recall they've been a partner in that because of their obvious interest in seabed when it comes to the aquaculture clearly local government has a lot of input into the that issue as well so marine planning is a partnership between all the various authorities whether it's the crown estate or local government or central government or whoever so the crown estate have been involved in that process up to now the marine plan is there and clearly post devolution we would expect to look at the remit of the crown estate in scotland and as we review that clearly a priority will be to support government policy and the public interest therefore the marine plans that are in place in terms of the future use of our seas is something that all public authorities would be expected to support and we would ensure that was a responsibility of the crown estate in scotland. If I can make one technical point we're discussing with the crown estate staff a number of operational issues and one of which is the sort of Mars marine planning IT system and we're looking across the whole IT spectrum to ensure that we've got an ability to continue to have IT operating as it fits with crown estate functions which includes that capability around marine planning. That's quite interesting as a marine squadron starting to to to to present some of this partnership that we would love of course with the crown estates. Clearly devolution of the crown estate in scotland means we have more influence over the remit to the crown estate in scotland to take into account the social and economic objectives of the Scottish Government. Dave Thomson to fall on in that way. It's obviously in everyone's interest to have a smooth transition and you already mentioned in relation to the question from Angus MacDonald there about the discussions with the farmers in your area. What have you been doing in terms of discussing with the wider stakeholders let's say aquaculture and offshore renewables people to ensure that smooth transition? Well we've done our best through our discussions with them, communications with them to give the signal that we very much recognise that we do want that smooth transition and we do recognise we'll have to take into account the impact on offshore renewables and the existing plans of any future arrangements put in place in scotland post-evolution. So clearly that two-stage process I've referred to before is very important. There is having the entity of the crown estate in scotland devolved to scotland that will continue as an entity. That will give the Parliament and the Government the opportunity to properly map the future of how to manage that collection of assets in scotland. We do not want to rush into this. Clearly there are some changes no doubt we can make rather quickly in terms of the remit of the crown estate in scotland but we have a situation where a collection of assets that come under the responsibility of the crown estate. So we have to carefully manage that going forward and not cause disruption that could damage business interests or Scotland's renewable energy ambitions or our tenant farming activities or whatever that may be. Cabinet Secretary, I'm wondering whether there is consideration by Scottish Government about looking very specifically at the remit and aims of the crown estate once or prior to, as appropriate, the transfer happens, because in past years some of us in the committee have raised with the crown estate the possibility of looking at a wider social remit and an economic development remit and I wonder what your view on that would be. Well my view is that that's a big opportunity and of course the people of Scotland, the Parliament, the Government don't just want devolution of the crown estate for the sake of it, it's because of wanting to do things differently and better and make sure that these assets are working for the public interest in this country. So clearly one opportunity that you quite rightly raised is looking at the remit of the crown estate in Scotland and the social and economic remit and therefore that would be a priority but it's important that that debate takes place in Scotland and over the coming months we'll ensure that that does happen. What I've tried to outline to committee today is that it's absolutely vital that we understand that we have to get proper devolution to enable that debate to properly take place otherwise it will be half cocked in that we won't have all the powers we expected to have therefore the debate won't be a proper debate so we just have to persuade the UK Government let's make this simple and clear and deliver what was promised by the Smith commission and agreed to and signed up to and then that debate will be a proper debate on what the role and functions of the crown estate in Scotland should be. You expressed some concern earlier on cabinet secretary about just knowing exactly what was in the books and just how much money comes and goes and just what the real bottom line is over a period of time given that there is some doubt about that can you give assurances to both the onshore and the offshore interests so that investment will be maintained into the future? Well clearly it's government policy to support that investment and to support offshore renewable activities therefore we will use every avenue we have to move that forward and make sure we can achieve renewable energy targets and take advantage of that massive resource we have and that will apply to the crown estate in Scotland as it will to every other agency and government body involved in making offshore renewables a reality. That will be our policy direction. Okay thank you very much and maybe just move on to ask you about the relationships that have been built up by the crown estate with local communities, local development trusts, private interests and so on and how you see that moving on as the transfer occurs and will that will those things be maintained? Well as an example when I met the 70 or so tenant farmers my constituency I know I'm speaking today as cabinet secretary but I think it's very relevant given that as MSP I met 70 tenant farmers on the crown estate land. As I said to them you know one big advantage of devolution is we will be able to ensure that they have direct input to their own futures. Of course there are some good relationships out there but I also know as a constituency MSP there have been some issues over a long period of time with the crown estate as a landlord. I think some of these issues are better than perhaps were in the past, perhaps no doubt because change was seen on the horizon. So it's a big opportunity to have whether it's a tenant farmer or whether it's commercial or business interests to have more of a say over their own future. Okay thank you. That's very helpful. We're thinking about the transfer of management to local authorities and others in this section and Jim Hume's going to lead on that. Very much convener, I just wonder how the Scottish Government sees the process of the further devolution to local authorities and communities working on how long that will may take. Well clearly again as I said before we're in the two stage process. One is the first stage is to ensure that we have the transfer of the crown estate in Scotland through devolution and then the next stage will be to map out the framework in which that operates within Scotland and their future management of those assets. As you will know it's Government policy that we have already given a commitment to the islands in this country that we would devolve income out to 12 miles in terms of the sea bed and also control over the foreshore which is clearly a big issue for island authorities with many ports and harbours. That's part of the islands agreement that we have which has been well publicised. Over and above that of course we've also said to the coastal local authorities in Scotland that the income from the sea bed would be passed to local authorities. Okay just on that very point you mentioned the island authorities. I know that there's an actual amendment to the Scotland building down at Westminster which states that the treasuring Scottish ministers must agree a scheme transferring to the control of each of the Shetland, Orkney and Wesson Isle councils in the transfer date all the existing Scottish functions and rights of the commissioners relating to those parts of the Scottish zone surrounding each of the island authorities on the actual day of that devolution. Would that be something that 56 MP colleagues have support? No because our policy is to have the transfer of the county, state and Scotland's entity and then to devolve to local authorities. And there are still some discussions going on as to what other powers should be devolved to local authorities. We have given a commitment, as I said before, to the island authorities and the coastal authorities of certain powers. We don't want devolution to stop in the Scottish Parliament, we want to go down to communities and we want Scotland to have that debate of whether or not there should be more powers over and above those already pledged by the Scottish Government. But this should be a smooth, clear process. Devolve to Scotland, Scotland devolves local authorities and that should be a proper flow of devolution and a proper debate. I expect that Aster Cymrukel would not have tabled that amendment if it had been a Liberal Democrat Government in Scotland. We welcome, of course, any support for devolving to local authorities. It is something that we are already committed to but we believe in a very smooth process to get there. On the point about devolution to islands and island authorities, obviously there are commitments that have been entered into, but there is also the issue of ability and expertise. Shetland Islands Council, for example, is involved in marine spatial planning, has been one of the first authorities to take those responsibilities on, has developed an expertise, which everybody admits works pretty well. Other authorities, such as the authority in Argyll and Bute, have no such expertise, whereas there is substantial expertise within the Crownate state itself. However, at local level in Argyll, for example, in Tobremory and the Harbour Association, substantial ability and track record of working with the Crownate state. Presumably, there is a flexibility about that next stage. Where it is to the benefit of the coastal communities, where it is to the benefit of those who are involved and to wider Scotland, then that would be the right way to go forward, rather than to have a doctrinaire view of this matter, which would say, for example, devolution to every affected local authority, which would end up with a complete guddle in some places. I cannot say it better myself. I think that Michael Russell has just summed up exactly why we have to be careful in how we move forward here. However, we have our aspiration to devolve further to local communities and local authorities, and we will certainly deliver that. However, as Michael Russell quite rightly says, Scotland is a very diverse country with diverse coastlines, and we may need flexibility. There may be different levels of demand in different parts of the country for devolved powers, so it is much better to put in place a flexible system than to pre-empt the devolution of the Crownate state to Scotland. Thank you very much, convener. It is just regarding what the Scottish Government's view is on the assertion that providing lease-giving powers to local authorities may replicate a historic position with the Crownate state in the past, where that authority may be the planning authority but also the authority that will make money from leases. In other words, it will have a regarding aquaculture, of course. Well, as I said, clearly the second stage of devolution of the Crownate state has to be mapping out the framework in which the Crownate state operates, and that will include further devolution to local communities and local authorities where appropriate. The seabed is clearly a strategic asset for Scotland, and we have to be careful about how that is managed and what powers are devolved in relation to that. What we, of course, have said is that the income generated from that seabed out to 12 miles, the net income, there is a good case for that to be devolved to local authorities. So there is still a debate to be had over what other powers are relevant or appropriate, and that is the benefit of having devolution in the Crownate state. We can have that debate for the first time because we will have the power in this Parliament to devolve where appropriate. So that is a very important part of the debate that you highlight, but I think that it is premature to take decisions at the moment on leasing who is responsible for that or otherwise in taking all those decisions at the moment. Okay, thanks, but I am good to note it at this point. Thank you. And I think that we look at the retention of expertise now with Alex Ferguson. Yes, thank you. It is really a question that I put to the Crownate state as well in the last session. It arises out of the two stakeholder sessions that we had earlier, at which we were given a very positive view of all stakeholders. I think that it would be fair to say relationship with the Crownate state. I think that, as I said in the previous session, it really stems from two reasons. First is the ability, and this is particularly related to the marine sector, of having one entity to deal with in the Crownate state, an entity that they were used to dealing with, and so their relationships have been built up over a number of years. The other thing was the high level of expertise that is available within the Crownate state. Out of that, some witnesses were suggesting that there are some functions, such as for instance management of offshore renewable energy and indeed research that might be better retained at a national level. I was really wondering what the Scottish Government's view of retaining that expertise is and how it can do that, while devolving to the islands, while devolving to some local authorities. How do you go about retaining the positive sides of the Crownate state that have been highlighted to us? We have highlighted one of the very practical challenges that we face, and we recognise that it is very important to maintain that expertise in the Crownate state and at that high level. It is certainly an objective to ensure that we do what we can to retain that expertise. That is why we are giving as much certainty as we can just now to the Crownate state staff themselves by saying that our support is therefore the Crownate state as an entity to remain in Scotland through the whole transport process and for the foreseeable future. Therefore, we want to give that certainty and continuity to the staff themselves. There is, of course, an issue in that some of the staff are based outside of Scotland to deal with Scottish issues and who have that expertise. Part of our discussions just now and their negotiations will clearly have to be to address that and seek the appropriate transfers of staff or whatever other solutions that are identified. We value that very much and we recognise why business and the various sectors that rely on that expertise would also want to see that continuity. However, you would be optimistic that our structure can be achieved that allows further devolution where required while retaining it. Further devolution is going to diminish the assets that come to the central body in whatever shape it might be. So you remain optimistic that you can retain all that expertise, retain that level of research and all that management expertise while being able to devolve where appropriate as well. Or you could turn that into a set and say that the evolution will enhance the assets and that we will build up a proper bank of expertise in this country given that we have the vast majority of the offshore renewable potential and therefore that expertise should have always been in any case based in Scotland. It was a decision by the Crown Estate to base those posts outside of Scotland but now we'll have the opportunity to do what's right and base those posts in this country so we'll build up hopefully the expertise even further and the asset here. My or Optimism Cabinet Secretary and I hope that it's not misplaced. Indeed, I think that that covers the ground as we see it at the moment and we're well aware that the processes in government in London mean that there may be a very rapid matter of taking this through the committee stage and so on. If that's so, we don't know whether we'll be able to come back and question you again but that might be necessary at the beginning of September. We'll have to see it in the meantime. Thank you very much for your evidence. We will proceed to keep an eye on all of this because it is very complex and we'd hope that it would be much simpler indeed. As agreed earlier, we will be going into private in the minute or two and at our next meeting tomorrow morning at nine o'clock we'll be taking evidence from the EU commissioner on agriculture and rural development, Phil Hogan. I now close the public part of the meeting and ask the public gallery to be cleared. Thank you.