Nicola Sturgeon’s plans for the Crown Estate — my response to the Scottish government

My article about Nicola Sturgeon’s plans for the Crown Estate caused some excitement within her administration. All untrue, they say. They have written a response (below). So what could have happened? It’s worth look at in some detail, as it gives an insight into how government works. The Crown Estate is in the news because Lord Smith’s Commission into extra powers for the Scottish Parliament recommended that Crown Estate assets in Scotland – and their profits – be handed over to the Scottish Parliament. And, in his report, Lord Smith added:

‘Responsibility for financing the Sovereign Grant will need to reflect this revised settlement for the Crown Estate.’

This is important because Lord Smith recognised there was a potential problem with the Sovereign Grant which is linked to the profits of the Crown Estate and goes to fund the Royal Family. Lord Smith did not specify a solution but he flagged up the problem. At present, the Crown Estate covers the whole of the UK and the seabed stretching out from the coast. In the 2013-14 financial year it made about £240 million in profits, of which about £14 million were made in Scotland. This matters because right now, all £240 million goes to the Treasury – and then 15 per cent of it is assigned to go the upkeep of the Royal Family. So last time, this was about £36 million – of which, pro rata, Scotland’s share was about £2 million. Now, when the Crown Estate’s assets in Scotland are handed over the Scottish Parliament, the Crown Estate in the UK will make less money – approximately £14 million less. But, the Queen will still need her £36 million. If there is less coming from Scotland, the Crown Estate as a whole will make less and the percentage of the assigned profits needed to cover the Queen and the Royal Family will have to go up. So who makes up the shortfall? Would Sturgeon’s government be expected to stump up? After all, the monarchy is a shared resource. Does it agree to send a cheque south to cover Scotland’s share of the costs of the Royal Family? Or does the Treasury, and the British taxpayer in general, pick up the whole of the bill – and the shortfall? This was the question I wanted an answer to so I asked the Scottish Government and this was the answer I got:

‘The level of funding the Queen receives from the Treasury under the Sovereign grant is set by reference to 15 per cent of the Crown Estate’s profits and does not come from Crown Estate profits themselves. With 71 per cent of taxes paid in Scotland continuing to be controlled by the Treasury, Scotland will continue to make the same contribution to the monarchy through general taxes.’

The reply was clear. The second sentence was unequivocal. It said that, even after the Smith Commission changes have come into effect, Scotland will still be paying substantial taxes into the Treasury so the Treasury can fund any shortfall in the Sovereign Grant through general taxation. Now, I can imagine the Scottish Government’s anger if my story based on this comment had come from an off-the-record conversation with a senior source, or if I had got caught a minister off guard. But I didn’t. I asked for a straight answer to a straight question and it took the Scottish Government two days to come up with its official line, a line I know was cleared and signed off by no less than John Swinney, the Deputy First Minister himself. They knew what they were saying and what it meant. So that was the basis of my story for the Mail on Sunday, a piece I then wrote a blog on for the Spectator Coffee House. But this seems to have startled them. It was then something of a surprise when, in response to my story, the Scottish Government issued a new – and very different line – to the media on Sunday. Here it is:

‘Reports in the Mail on Sunday are complete nonsense. Scotland will continue to contribute a full and fair share to the Sovereign Grant which is pegged to, but not actually drawn from, a proportion of Crown Estate profits.’

On Friday, Scottish ministers said:

‘Take the money from the Treasury, as we all contribute to taxes’

On Sunday, ministers said:

‘We are not going to back away from our responsibilities, we are going to pay our full and fair share of the Sovereign Grant.’

It is difficult to see how the two statements fit together – but that was not my concern, my concern was to report the first, official, proper statement I was given by the Scottish Government about the Crown Estate. Which I did. As for my blog on Coffee House – it was, as befits the Spectator, views. And ones that Sturgeon’s lot did not like. But these views were also based on a cast-iron, clear and unequivocal statement from the Scottish Government given to me and reported in the Mail on Sunday – whatever ministers have said since. The SNP’s sympathisers have been much-exercised by all of this. Land reform campaigner Andy Wightman wrote a piece helpfully titled ‘A dung heap of unadulterated, fabricated crap’ (really, Andy you are too hard on yourself). In this piece, he wrote the following:

‘The Smith Commission notes the issue in relation to the Sovereign Grant because once the Crown Estate is devolved, the revenues of the Crown Estate that are remitted to HM Treasury will suffer a one-off reduction by the amount of the revenues generated from Scotland. Such an adjustment will presumably be made by altering the 15 per cent figure to a slightly higher figure and the Sovereign Grant will continue to be paid by the Treasury from funds voted by the UK Parliament as it is now.’

I agree – except it would not be a one-off adjustment. The Treasury would have to increase the percentage that is linked to the profits of the Crown Estate – and which goes to fund the Royal Family – and it would have to pay this higher percentage every year in perpetuity. That is what I have saying all along – but I’m very glad that Andy agrees with me on the general principle. So what are we left with? We have the Scottish Government saying that any shortfall for the Sovereign Grant should, after Scotland has taken its share away, come from the Treasury, from all taxpayers, from you and me, and not from Scotland’s share of the Crown Estate – something even my harshest critic seems to agree with me on.

So here is the Scottish Government’s response. Readers can, of course, make up their own minds as to what has been going on.

‘Hamish Macdonell’s blog in the Spectator on the proposed devolution of the Crown Estate to Scotland, and Scotland’s financial contribution towards the Royal Household, is completely unfounded and ignores the key facts. The First Minister and the Scottish Government’s position could not be clearer – Scotland should and will continue to fund a full and fair share of the Sovereign Grant. ‘The reality is that the Sovereign Grant is pegged to, but not actually drawn from, a proportion of Crown Estate profits. Indeed, the Crown Estate’s own website – in a section entitled ‘Mythbusting’ – makes clear that the Royal Household does not receive 15 per cent of the profits from the Crown Estate under the Sovereign Grant.  The Sovereign Grant simply sets the level of funding Her Majesty the Queen receives from the Treasury by reference to 15 per cent of the Crown Estate’s profits. ‘The Sovereign Grant itself and the level it is set at remains a reserved matter for the UK Government. It is not under the control of the Scottish Government. The Scottish Government therefore does not have the power to reduce it, even if it wanted to – which it doesn’t.’