Inquiry into the Scottish Government’s Public Service Reform programme - Public service organisations

Crown Estate Scotland is a self-financing public corporation, underpinned by the Scottish Crown Estate Act 2019, returning surplus net revenues to the Scottish Consolidated Fund.
Income and receipts are generated from management of The Scottish Crown Estate which includes land, seabed and other property interests through the deployment of investment, asset management, engagement, and development expertise.

As noted above, Crown Estate Scotland generates income through the management of land, seabed, and other property interests. This requires ongoing capital investment to manage liabilities and generate future revenue.
In terms of offices, we are co -locating staff in HIE offices to reduce costs, optimise collaboration and reduce our carbon footprint. We are also considering subletting any underutilised office space to other public bodies.
As a commercial entity, we are constantly operating under the principle of continuous improvement and our next five-year corporate plan commencing in FY 25/26 will commit CES to new ways of managing assets to deliver even more value for the people of Scotland.

Draft figures for 2022-23 and budgeted figures for 2023-24 are provided below.

2022-23 (draft)
Gross income: £110.3m
Gross staff costs: £5.2m
Number of staff @ year end: 73
Income per staff member: £1.5m

2023-24 (budget)
Gross income: £129.9m
Gross staff costs: £7.1m
Number of staff @ year end: 90
Income per staff member: £1.4m

• Leveraging bespoke applications developed by other organisations involved in similar commercial and asset management activities, with a particular emphasis on the management of the seabed
• Utilising advanced risk management software to help manage the income risks associated with offshore wind revenues and aquaculture yields.
• Wider use of GIS technology and data analytics.

• We are preparing a 10+ year investment and asset optimisation plan which is due in Q1 24/25. In line with the duty placed on us by the Scottish Parliament through the Scottish Crown Estate Act 2019, Crown Estate Scotland invests to create value - the more we invest, the greater our financial returns.

• We have close working relationships with many of Scotland’s local authorities, the enterprise agencies, Scottish Land Commission, Marine Scotland and NatureScot. This enables partnership working to effectively and efficiently deliver strategic initiatives such as the Community Land Acquisition project with Scottish Land Commission, and the Scottish Marine Environmental Enhancement Fund (SMEEF) with NatureScot and Marine Scotland.
• Several initiatives involve CES part-funding fixed-term roles based with other public bodies. Basing staff resource with delivery partners supports effective delivery and knowledge transfer / learning between bodies. Many roles are focussed on building capability, ensuring initiatives are sustainable and are embedded long-term.

• Crown Estate Scotland takes an innovative approach to designing our leasing activities thus maximising the revenue and socio-economic benefits that initiatives such as ScotWind can deliver for Scotland. Our most recent offshore wind leasing round is designed to deliver Innovation and Targeted Oil and Gas (INTOG) projects, with the TOG projects helping to decarbonise North Sea oil & gas operations. INTOG leasing represents a new and innovative approach to offshore wind leasing.
• ScotWind and INTOG together will generate around £1billion in initial option fees, then further hundreds of millions through rental payments once tenant offshore wind projects are operating.
• ScotWind and INTOG leasing require developers to provide Supply Chain Development Statements (SCDS. The introduction of the SCDS into our leasing activities is an innovative approach designed to support a sustainable offshore wind sector in Scotland, attract investment to Scotland and ultimately contribute to the delivery of net zero requirements and a just transition.
• Crown Estate Scotland can also take a more innovative approach to investment, diversifying asset classes, working alongside private sector monies, and indeed investing in other jurisdictions if government so wishes.

• Over the course of FY 23/24 and moving into FY 24/25, Crown Estate Scotland will become increasingly focused on capital formation and capital investment. As a result, Crown Estate Scotland will examine new dynamic opportunities to procure and deliver capital investment and associated services.

We cannot comment on this timescale because as noted above, Crown Estate Scotland is a self-financing public corporation and we do not receive grants or funding from Scottish Government. Our costs are met from our gross income streams under provision in the 2019 Act. Reducing the scale of CES or the quantum of investment is in contradiction to the principle of Value for Money - as the more we invest the more money we make for redistribution.

• Our Sustainable Communities Fund has a community capacity grant stream making grants of £300k available each year to support self-sustaining social enterprises progressing early stage projects contributing to local regeneration and sustainable development. The grant stream is seeking to help create great places to live, work and visit benefitting the whole community.
• We are working to support the offshore wind supply chain in Scotland which will deliver socio-economic benefits in coastal communities.
• The development of our 2025-2030 Corporate Plan will include consideration of how we can build in tackling child poverty into more of our initiatives.

• Through our work to support ScotWind and INTOG, the development of the Montrose ZeroFour Green Innovation Hub and the decarbonisation of our residential and urban portfolio, we will support Scotland’s transition to net zero.
• Similarly, through our Challenge Funds, we will invest in communities to help transition the economy and fund a number of jobs in partner organisations, decentralising employment opportunities.
• Path finding work is underway in relation to hydrogen, carbon capture, wave and tidal energy generation, wet data cables, and aquaculture as part of our efforts to advance Scotland’s Blue Economy.
• Our work to advance master planning and investment across the rural estate will support employment opportunities in remote and rural locations. As part of this work, we will also deploy capital to advance biodiversity and nature-based solutions.
• Overall by 2030, we will have deployed £60m capital into the Scottish economy to support the transition to net zero by carbonising our own asset base, acquiring new assets and supporting the ScotWind opportunity.

• In financial year 23-24, we will continue to grow and generate increased revenues, returning at least £70m surplus net revenues to the Scottish Consolidate Fund for redistribution against ministerial priorities.

As noted above, we are a self-financing public corporation. We do not directly add to the Scottish public sector total pay bill and we do not have plans to reduce head count or our pay bill. If necessary or desired, Crown Estate Scotland could be moved outwith the Scottish Public Sector following the model adopted in England, Wales and Northern Ireland.

As a public corporation with a unique role and vires, the challenge to “do more with less” is counterproductive and potentially very damaging to Crown Estate Scotland and our activities. We are designed to operate on a long-term basis using the principle of “spend more to make more and deliver more” and we do this in line with Ministers’ policy priorities and the National Performance Framework. This is the duty that sits with us by virtue of the Scottish Crown Estate Act 2019. We are keen that Scottish Government understand our unique way of operating.

As a self-financing public corporation, we are not currently intending to produce a service reform plan (unless directed otherwise by Ministers).

As a self-financing public corporation, we have not expected nor received support or guidance to deliver efficiencies etc.

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