Reality check: the Coastal Communities Fund from the Crown Estate portfolio

Treasury Secretary, Danny Alexander, born on the Isle of Colonsay on the Argyll west coast of Scotland (we mention tbis to underline how much he should know better), has today announced a Coastal Communities Fund to be drawn from the marine revenues of the Crown Estate portfolio of rights and assets.

It will benefit all coastal communities in the UK – but, as detailed below, the definition of a ‘coastal community’ may take some by surprise.

The fund is clearly a sop to buy off the Scottish Government, which has been pushing powerfully for the devolution to Scotland of the revenues earned from the Scottish sea bed, currently controlled by the Crown Estate Commissioners out to the 200 mile limit.

The scheme has fairnesses, strengths and weaknesses which we will examine below, in making a proposal which would address its core weakness.

How the Coastal Communities Fund will work

Each year, the Coastal Communities Fund will receive 50% of the Crown Estate portfolio’s marine revenues earned in that year.

This will be allocated to each of the four home nations as 50% of what is earned in marine revenues within their territory.

For the purposes of the fund, the definition applied to the term ‘coastal community’ is given as: ‘any coastal settlement within a local authority whose boundaries include UK foreshore, including local authorities whose boundaries only include estuarine foreshore’.

This means that communities not actually touching the foreshore but within sufficient striking distance of it – or  of a river estuary, to be credible ‘coastal communities’, will be eligible to apply for funding  the back of Argyll and Bute’s munificent foreshore boundaries.  For example, this should embrace communities like Drumlemble on the Mull of Kintyre, Kilmichael in Mid Argyll, Ballygrant on Islay, Millhouse and Glendaruel  in Cowal, Appin in North Lorn, Kilninver and Kilmelford in Oban South.

Also Glasgow and Edinburgh communities, for example, would not be thought of as ‘coastal’, but, under the rubric as it stands on the government website, they would be as eligible as any other.

The Coastal Communities Fund will  be managed by the Big Lottery. It will be open for bids from April 2012. Details of how to apply are to be announced shortly.

The first Scottish allocation – and its actual impact

In 2010-2011, the Highlands and Islands brought in £3.7 million to the Crown Estate portfolio marine revenues. Its first allocation from the overall fund will therefore be £1.85 million.

The rest of Scotland earned £4.1 million in the same period so ts first allocation will be £2.05 million.

Looking at the map of Scotland and seeing both the percentage of its communities that are coastal -= and then adding those in the council areas with foreshore or estuarine boundaries quickly makes it clear that there will be few that will not eligible.

Looking then at the total amounts available initially to the two Scottish areas should bring a sense of reality as to what this will actually mean for individual communities.

Given that the aim of the find, as given today, is to encourage: ‘innovative bids from charities, businesses, social enterprises and local organisations, which support the economic development of the community’ – that initially adds up to a new PA system for each village fair. Awarding major amounts to any one community project from such a small pot would prove pretty troublesome.

Obviously, with the growth to come both of offshore wind farms and, crucially of wave and tidal energy installations, Scotland, as a whole, will earn increasingly significant marine revenues for the Crown Estate portfolio, half of which under this plan, will be returned to it in this way.

Fairness and consequences

The  very principle on which the fund is distributed – which is fair, with each nation’s communities being allocated 50% of its marine revenue earnings – calls into question the principle by which that allocation will be distributed to communities.

It would suggest that the same principle should be applied to each local authority area, with each apportioned 50% of its marine revenue earnings. But this does not appear – certainly as yet – to be the plan.

Spending not saving

The big overall weakness of this plan is that it is about spending not about saving. Nations, as much as individuals and households, need to save and invest both for rain days and for infrastructural development.

Scotland looks admiringly at Norway’s Oil Fund and bemoans the reckless extravagance that has seen Scotland’s and the UK’s revenues from the oil boom spent for political expedience by the Westminster government of the day.

All of the home nations need to harvest and tend carefully to the earned from their renewable energy developments.

This plan is keeping half of that asset and throwing away the other half largely to buy off attempts, principally by Scotland, to return national rights and assets currently held in the Crown Estate Portfolio, with its revenues going to the UK Treasury.

Its strength is its immediacy – open for bids from April 2012  but this is part of the political ploy – a little bread today with a little jam tomorrow – to buy off the pressure to dismantle the Westminster controlled Crown Estate Portfolio.

Without the capacity for the earning nations to save and invest such revenues, this plan is both short termist and actively encourages imprudent fiscal attitudes.

The mode of distribution

The Big Lottery, proposed as the award maker from the funds – is unelected and has neither responsibility for nor accountability to any of the home nations.

We do not see any legitimacy in such a body being given the authority to distribute such a fund within the national territories that have earned the revenue of which their allocation represents 50%.

Proposal

If the crown estate revenues are not to be devolved  – and it still remains within the legal purview of the Scottish Government directly to amend the ownership of the Scottish rights and assets held in the Crown Estate portfolio – there is another way that their national origins could be better recognised.

By far the major part of Crown Estate portfolio revenues come from its property portfolio in and around London and the south east.

That is no-one’s business but Westminster’s. It is itself an argument for the immediate devolution of the other national revenues to their home parliament and assemblies. But if this is resisted – as it is – and Scotland, for whatever reason, refuses to act as it is legally empowered to do, there is no reason for what looks like indefensible greed in hanging on to the marine revenues.

Furthermore, the myth of Scotland as the major earner in this field is dissipated by the reality of earnings.

In 2010-2011, the total marine revenues coming in to the Crown Estate Portfolio were £47.4million.

Of these:

• England earned £36.4 million – or 76.79%
• Scotland earned £7.8 million – or 16.45%
• Wales earned £2.3 million – or 4.84%
• Northern Ireland earned £0.9 million – or 1.89%

These revenues could be devolved in their entirety, with the proviso that 70% annually be set aside for investment in a national infrastructural fund and 30% be distributed to communities – by whatever criteria the home nation’s governing body determined.

The single problem, as we keep pointing out is the parlous position of England post-devolution. It is the most indefensibly disadvantaged of the four home nations. We should all be insisting that it is treated as fairly as we have demanded for ourselves.