“There is no organisation in the world like The Crown Estate”, according to its own website. And who could disagree?
The Crown Estate Commissioners may think they run a quaint British institution of a kind that disappeared centuries ago in other, lesser lands. Many who deal with them take a less romantic view.
I have been writing about the Crown Estate for a long time. In the early-1980s, it blundered into my consciousness through its leasing of west-coast sea lochs to multinational salmon-farming companies without consulting anyone.
Quite literally, people whose families had lived and worked in these places for generations woke up to find that the entire rights to use of a loch had been flogged off to Unilever or some such outfit. It was an astonishing saga that gave rise to decades of problems and resentments.
So I became interested in the Crown Estate and concluded that its role as controller of Britain’s marine resources was an intolerable anomaly. Nothing has changed in the interim and there are now urgent reasons for the issue to be addressed.
The Crown Estate’s £6billion of assets are mainly in property around the wealthiest areas of London. Walk down Bond Street or through Belgravia and you are in prime Crown Estate territory.
But, as a sideline, the Crown Estate also owns half the coastline of Britain and – critically – the entire seabed out to 12 miles. This gives the organisation a huge degree of relevance to offshore energy, as well as other marine activities like fish farming.
Until recently, energy interest has focused on offshore renewables. It is not the Government of either Scotland or the UK that runs licensing rounds for offshore wind, wave or tidal. It is the Crown Estate.
The question arises: what are neighbouring communities going to get out of it? I saw this coming when I was UK Energy Minister and opened discussions with the Crown Estate about royalties for coastal communities. Last I heard, not a lot has happened and no assurances have been given.
Offshore renewables may not develop on the scale currently envisaged. But if they do, it is surely essential that some of the economic benefit should come to the places that look out on them – just as would happen if these developments were onshore. The legal theory is that local rights stop at the foreshore, where the Crown mystically assumes responsibility. But the reality is that people who live by the sea are entitled to share in the wealth created out of it – whether it is fish, minerals or electricity.
Now, the oil&gas industry is becoming aware that the Crown Estate is also relevant to them. Hydrocarbons were never included in its remit.
But, thanks to the 2008 Energy Act, it has taken control over development of gas storage and carbon capture – two key areas of future activity, of great national importance.
North Sea companies are used to dealing with the licensing system developed over many years by the DTI, now DECC. A high degree of transparency has been created and bureaucratic obstruction reduced to a minimum.
The interrelationship between existing operations and the prospective boom in storage facilities means that the obvious place for licensing to be run from would be DECC. Not a bit of it. The Crown Estate has won that responsibility.
Professor Alex Kemp, of Aberdeen University, who knows all there is to know about the North Sea, says: “Because DECC has technical expertise in storage of gas and CO2 they have to be involved in the regulatory process as well as the Crown Estate. This adds to costs and can cause delays. The licensing fees for oil and gas charged by DECC are very transparent, while those charged by the Crown Estate for gas and CO2 storage and offshore wind farms are all on a negotiated basis.”
And he is right. It is a piece of nonsense that will certainly do no good and could well create delays and confusion.
However, yet again, the challenge of taking on the powers of the Crown Estate has been sidestepped rather than confronted.
As a lifelong republican, I would be delighted to inform you that the substantial profits of the Crown Estate – £210million last year – go towards keeping royalty in the manner to which it is accustomed.
Unfortunately, that is not true. The money goes straight to the Treasury.
No Government minister has responsibility for the Crown Estate, although it provides an annual report to parliament. Apart from that, this organisation really is a law unto itself, and often behaves in that way. Its people are not experts in North Sea storage any more than they were experts in fish farming, but that never deters them.
If, like me, you feel like challenging the activities of the Crown Estate, proceed with caution. Clause 1.5 of the 1961 Crown Estate Act states that nobody dealing with it will be “concerned to inquire as to the extent of their authority or the observance of any restriction on the exercise of their powers”.
Now, what politician wouldn’t envy a clause like that on the statute book?