Crown Estate 'needs to support public interest more'

30 March 2010

The Treasury Committee today releases its report on the management of the Crown Estate

The Crown Estate Commissioners (CEC) manage the Crown properties and property rights known as the Crown Estate, including urban and rural property valued at over £5,000 million, Windsor Great Park, and extensive rights over the marine environment.

The surplus revenue generated by the Crown Estate - £226.5 million last year, £1.8 billion over the last ten years - goes into the Consolidated Fund, a general fund that the government uses for public expenditure.

The Committee’s inquiry was the first into this public body for over 20 years. The Committee found that the CEC runs a successful business operation.

However, Members were concerned that, in some areas, the extent of the CEC’s emphasis on revenue generation, meant the body was not taking full account of wider public interests.

The Committee and the Government differed on the latter’s scope to provide advice and direction. Members concluded that the Government is taking too narrow a view of the scope it has to advise the CEC on the extent to which it ought to take wider public interests into account.

Sub-Committee Chair Michael Fallon said:

"The CEC matter from a narrow Treasury perspective, and from a wider public interest perspective. They matter because of the extent of their property portfolio, and the amount of revenue they generate.

"They also matter because of their pivotal role in the marine environment where they have the ability to influence, for better or ill, important new economic developments, including renewable sources of energy.

"Although they operate under the terms of 50 year old legislation, the CEC have more flexibility to accommodate wider public interests than either they or the Government appear to realise.

"Whilst we recognise the organisation’s core financial task is to maintain and enhance the value of the Crown Estate, we urge the CEC to take more account of the wider public interest in their activities, such as providing urban housing or developing the marine environment. And we urge the Government to step up to the mark and advise the CEC on those wider public interests."

The Marine Estate

Stakeholders are concerned by the emphasis the CEC are placing on marine revenue rather than long-term development and by CEC’s monopoly position. The report welcomes the CEC’s recognition of the importance of greater partnership-working and the Government’s intention to review the CEC’s monopoly position. The CEC recommends the Government review the two-tier system it has established whereby a Government agency and the CEC each have responsibilities for seabed management.

The report notes frustration in Scotland - where much of the marine development is taking place - at a lack of engagement by the CEC. It recommends that the Scottish Government and CEC agree a memorandum of understanding and that the CEC greatly strengthen their management arrangements within Scotland.

Michael Fallon said:

"The CEC ought to be able to adopt an approach that is more sympathetic to developing new marine industries. We also call for urgent improvement in the level of CEC engagement within Scotland."

The Urban Estate

The CEC are proposing to sell off four London residential estates. Evidence to the Committee raised concerns about this, including a failure to consult organisations with rights to nominate key workers. The report recommends the CEC review their consultation processes and engage more fully with key public bodies about their plans for their London portfolio.

Joint Ventures and Transparency

The report expresses concern about CEC’s involvement in joint ventures, notably the Gibraltar Limited Partnership, which has encountered grave difficulties, and recommends that the Treasury review whether such involvement is compatible with borrowing constraints in the Crown Estate Act 1961.

The report calls on CEC to clarify the nature of their organisation, its duties and the resources they manage in future Annual Reports.

Michael Fallon said:

"We were alarmed to find that the Treasury has approved CEC involvement in Joint Ventures, given the statutory restrictions on CEC borrowing."

Wider Review

The report recommends a wider review of the management of the Crown Estate and the 1961 Act, to ascertain whether the current framework for the management of the Crown Estate remains appropriate.

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