Ken Thomson

Following the Land Reform Acts of 2003 (“responsible public access”) and 2016 (more “community right to buy”), the Scottish Government (SG) is now consulting on a further Land Reform Bill, which is to address the concentration of land ownership in the country. The consultation (“Land Reform in a Net Zero Nation”), which closed on 25 September 2022, mostly focusses on the owners of “large-scale land holdings”, e.g. those over 3000 hectares, who would have to:

The SG is to introduce an "ambitious" Bill to the Scottish Parliament in 2023.

Firstly, what should constitute a large-scale land holding”? – three options are suggested:

Note that area does not correspond to value (market or otherwise), which is presumably seen as far too contentious to be practicable. Estimates vary, but the well-known campaigner Andy Wightman estimates that 358 land holdings exceed 3000 hectares and cover 35.6% of Scotland. However, the threshold would exclude “family farms”, on which “disproportionate duties” would otherwise fall.

The Land Rights and Responsibilities Statement (LRRS) of policy aims and practices was published in 2017, and consists of a vision and six principles, supported by advisory notes and good practice protocols (currently under review). Compelling land owners to “comply” with these would throw up a number of problems, including monitoring, enforcement and cost. Only locally connected bodies with “a community, charitable or public service remit” could report LRRS breaches to a Scottish Land Commissioner, who would consider mediation or direction, and enforcement could be via direct financial penalties or “cross-compliance” ones, i.e. loss of land-based subsidies (see “public funding” section below).

A Management Plan “should show how the management of the [large-scale] landholding contributes to relevant land use, economic and community development priorities and opportunities, as set out in community plans, regional land use strategies, and national policy”. It might also include “information on land … that would generate revenue from carbon offsetting/carbon credits”, as well as proposals for economic development or nature restoration. The Plan would be “high-level/strategic in nature”, but would have to demonstrate how the land will be used to meet LRRS requirements for sustainable management, and set out how the owner will engage with local communities. It would have to be “reviewed and updated periodically, e.g. every five years, or in the event of a significant change”.

Large-scale land transfers, which have often attracted criticism of non-transparency, would have to pass a “public interest test” (PIT) to assess whether “a risk would arise from … a situation in which excessive power acts against the public interest.” Monitoring and enforcement issues would again arise, as well as several others. For example, would such a measure transgress the European Convention on Human Rights (ECHR), which requires a strong justification for interference in property owners’ rights? Would the PIT have to be satisfied by both sellers and buyers (to avoid increased concentration)? What about transactions in the shares of a land-owning company? How would the “community right to buy” be integrated into the PIT?

A separate section of the consultation – and one not restricted to large-scale holdings – concerns “public funding”, i.e. grants or subsidies such as those for tree planting and peatland restoration (the consultation document is silent on whether the very much larger amount of agricultural grants and subsidies would be included). It is proposed that all such recipients should be registered (in the Land Register, which is replacing the old Register of Sasines) and be liable to pay tax in the UK or the EU, the latter in line with the SG’s wish, with Independence in mind, to stay aligned with Brussels. The consultation document considers that “this requirement could help deal with instances of absenteeism, and help to ensure social justice and that income generated by the ownership of Scotland’s land and buildings is not extrapolated [extracted?] by wealthy individuals to the detriment of local communities.” Presumably, large-scale Scottish landowners who are obscure companies or trusts in obscure places such as the Caymans will have to set up a more (but not necessarily very) local base.

The consultation document has a final section on “Other land related reforms”, which might be included in the Bill, or (more likely) taken forward in future legislation or regulation. These include taxation in support of land reform (an issue likely to involve the UK government, and the question of tax reliefs), and “community benefits and natural capital”, i.e. how to maximise community and/or national benefit from investment from natural capital, such as for the purchase of carbon credits.

The sharp-eyed reader will have noted that nowhere above mentions “Net Zero”, i.e. a balance of carbon emissions and sequestrations. The phrase is in the title of the consultation, but the document hardly touches on this issue, except indirectly, i.e. the content of the LRRS (which refers somewhat generally to the need to “protect and enhance the environment”), and of the proposed Management Plans. Neither is the partly associated issue of nature restoration, although there is a separate and ongoing consultation on the SG’s Biodiversity Strategy. Instead, the focus here is on “excessive power acting against the public interest” arising from large-scale land ownership in rural areas.

As might be expected, reactions to the consultation – as far as known at time of writing – are mixed, to say the least. Many early commentators regretted the restriction of most of the proposals to “large-scale” rural land holdings, and that taxation seems neglected as an avenue of effective land reform. They doubted how far the proposals, even if included in the Bill and subsequent Act, will be enforced, and, even if enforced, how far they would alter the historical pattern of landownership concentration and absenteeism in Scotland. Others wondered about the role of local authorities, as the main democratic “community”, bodies, in all this. And what if there is no “local community”, other perhaps than estate employees and dependents?

Landowner representatives see Management Plans as yet another layer of bureaucracy on top of existing requirements, and criticise the “lack of evidence” underlying the proposals that the current ownership pattern and land transfer practices inhibit development. They will no doubt wish to probe the details, e.g. is family inheritance a “transaction” or “transfer” requiring a new Management Plan and operation of the Public Interest Test?

Is the threshold of 3000 hectares a suitable cut-off? - the Scottish Land Commission suggested that it might be as low as 1000 hectares. And why exclude “family farms” (however defined)? – although in 2019 only 3 of about 100 farms marketed were over 400 hectares (Strutt & Parker’s Scottish Farmland Market Review, Winter/Spring 2020), some farms exceed 1000 hectares, and are perhaps more likely than mixed estates to want to exert “power” over land use.

And meantime, the world moves on, e.g. in terms of higher estate prices (particularly for forestry, and/or for carbon offsetting) and more sales, many of which are “off-market”. This is putting pressure on the Scottish Land Fund, which helps communities to buy (but not to manage) land; the SG has promised to double the Fund by 2025 but this is still likely to be inadequate. Land markets can be volatile, the carbon market is relatively unregulated, and the prospect of Scottish Independence might well affect “confidence” (as it did during the 2014 Referendum), so that the future trajectory of land holding transactions is very uncertain.

The Consultation ending in September 2022 is simply one step in a long-drawn-out process, including Draft Bills, committee hearings, amendments, the Act, secondary legislation, “commencements”, possible legal challenges, etc. Watch this space!

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