The land of Scotland and the common good: report

Section 15 - Local Communities

6 Any discussion on the development of community land ownership usually faces the inevitable question of 'What do you mean by community?' The term 'community' is widely used in many ways in different contexts and there is a diverse range of types not only of communities but also of 'community organisations' in Scotland.

7 Scotland's landscape, both urban and rural, can be considered to be covered by local communities or neighbourhoods. More or less every one of us lives in one of them and most residents in a local community or neighbourhood also tend to know its identity, as the local area in which they live, and with which they identify. While the scale and complexity of local communities in urban and rural areas can vary very greatly, the same basic principles apply to the nature of local communities and local community development.

8 In this section, the Review Group examines the nature of communities, and identifies two key issues which the Group considers should be addressed to help promote " stronger, more resilient, and independent communities". (See Annex 1)

15.1 The Nature of Communities

9 There are many definitions of 'community' and a significant body of theory examining the nature of community. ^[1] Because land is the core of the Review Group's work, the concept of place is central, and therefore the focus here is on communities which are defined by geography, which can be applied to both rural and urban areas. These communities of place are often referred to as neighbourhoods in urban areas.

10 But communities are more than simply a group of people living in a particular place. 'Community' involves a complex set of relationships between individuals and groups, involving networks and other linkages, such as family and kinship ties, collective voluntary action, informal reciprocity and trust. In addition, there are more intangible aspects such as sense of place and belonging, shared history and cultural identity, and, important to this report, attachment to land.

11 There are also 'communities of interest' which are social groups or networks with a particular shared focus. In looking at land issues this is important inasmuch as local, regional or national organisations based on communities of interest can become involved in land ownership and management, such as crofting trusts, the John Muir Trust ( JMT), the Royal Society for the Protection of Birds ( RSPB), and the National Trust for Scotland ( NTS).

12 The complex relationships in geographical communities described above are often referred to as 'social capital' and this is an important element in the resilience of local communities and economies. ^[2] Strengthening social capital and building capacity in communities are critical processes in the growth of local community land ownership and management, and these processes of community development are often assisted by external, often public, agencies. This type of support is discussed in Section 19.

13 Scotland has been at the forefront of using the ownership and management of land as a means of empowering and strengthening local communities. 'Asset-based community development', is now commonly accepted as a important part of an organic, bottom-up, people-centred process, responding to threats and opportunities and forging an alternative approach to large scale top down solutions which have characterised regeneration in many parts of Scotland for decades. ^[3] To further facilitate this process, the Group believes that there needs to be an effective level of local democracy in Scotland through which communities can represent their views, and also support for community bodies that participate in land and other asset owning for local community benefit.

15.2 Local Community Democracy

14 Unlike many countries, Scotland has no equivalent of democratic public administration at the local community level. Scotland traditionally had three levels of public administration or 'government' viz. national government, counties and local burgh, town and parish councils. However, during the 20th century, successive local government re-organisations have progressively removed the lower levels of local government. At the start of the 20th century, Scotland had 37 counties and 1109 parish councils and town councils,3 but following major re-organisations in 1929, 1975, and 1996, Scotland now has 32 unitary local authority Councils with a total of just over 1,200 elected Councillors. ^{[4] [5] [6] [7]}

15 Community Councils ( CCs) were introduced in the 1975 re-organisation, and these continue today. However, CCs were given few powers or specific responsibilities, other than a requirement on local authorities to consult each CC on planning applications in its area. CCs were also given no resources, other than any grant that a local authority might give towards administration expenses.

16 At present, there are 1514 CC areas in the 32 Council areas and the most recent survey indicates that there are active CCs in 1215 or 80% of the CC areas. ^[8] While it might be noted that 60% of the inactive CC areas were in three local authority areas, the shortcomings of many CCs, in terms of local representation and engagement, are well recognised. As a reflection of the difficulties facing CCs, and reduced funding, the Association of Scottish Community Councils wound itself up in 2012.

17 The Group is aware that there are some examples of CCs being involved in land reform issues, through being active in the early stages of identifying potential community acquisition opportunities, and in mobilising support. But as outlined above, the network of CCs is patchy and even where they exist, and are active, CCs generally do not own land or other assets.

18 The Group recognises that a number of publications have recently contrasted Scotland's position with the much more local forms of local government in other European countries, as part of calls for the restructuring of local government to create a level below the current unitary local authorities. ^[9] But the Group also notes that proposals for a reform of CCs were not included in the Scottish Government's current Community Empowerment (Scotland) Act. While the Group considers that the lack of a representative democratic structure at the local level can act as an obstacle to developing stronger local communities, and that the powers of CCs could be reformed, the reorganisation of local government is not a central focus of this review.

15.3 Local Community Ownership

19 An increasing number of communities have developed other types of bodies to channel, proactively, their energy and dynamism to tackle local needs and opportunities directly themselves often articulated in the form of a community plan. These are democratically run organisations, often asset owning, known by various names, including 'anchor organisations', and are active in community development and regeneration across Scotland. The ownership of buildings and land has been an important part of their work.

20 The defining feature of these community bodies is that they are owned and managed by the local community as a whole, for the benefit of the communities. There are four widely recognised essential criteria for these local community bodies. These are:-

• Common Good: The community body must have a clearly stated social purpose that benefits the local community
• Open Membership: Membership of the community body must be open to everyone on the electoral register within the local community's area
• Local Control: The body must be democratically controlled by the local community at both membership and board levels. A majority of the community body's voting members must be members on the electoral register within the local community's area and, at least a majority of those on the board and eligible to vote must be members of the local community elected by the local membership
• Non-Profit Distributing: Surplus funds or assets must be re-invested into the work of the community body to further its objectives and if it is wound up, its assets must be passed to another non-profit distributing body with similar objectives

21 These well established criteria mean that there is limited choice in the types of legal constitutions suitable for these local community bodies. For example, while a local Community Association could meet the criteria, the liability for its actions falls on its members because it is an unincorporated association. This can be a particularly important liability with the ownership of buildings and land. Some types of insurance are available to address aspects of this, for example, with a community association owning a village hall or district angling associations owning fishing rights. However, an unincorporated association is generally not recommended for a local community body owning property or undertaking other significant economic activities.

22 The most widely used type of constitution for these local community bodies is a company limited by guarantee, and usually also with charitable status. In the Land Reform (Scotland) Act 2003 Part 2, which vests the right in local communities to register a pre-emptive right to buy over land, the 'appropriate community body' to do so on behalf of the local community, is defined as a company limited by guarantee that conforms to the four essential criteria above. It should be noted that liability of members of such companies is limited to the value of their membership, but that directors have the same responsibilities as any 'normal ' company; for example they are liable if the company trades while knowingly insolvent.

23 Nearly all the existing community bodies to date that conform to these criteria have been established as companies limited by guarantee. The Group notes that whilst it is important to adhere to the criteria, there can be flexibility with this particular legal structure. For example, the company structure of the Isle of Eigg Heritage Trust is a partnership comprising the Highland Council, The Scottish Wildlife trust and the Eigg community, and the Knoydart Foundation originated as a consortium, involving a range of bodies including the Highland Council, HIE, the John Muir Trust, and the local Community Association and other private Trusts. Having partners working formally with community bodies is important, in terms of bringing expertise and external finance into community land acquisition and management.

24 However, the Group notes that other legal forms are being evolved which can be appropriate for community land ownership. For example, the Scottish Charitable Incorporated Organisation ( SCIO), introduced in April 2011, can also provide scope for a constitution that meets the essential requirements of a community body owned and managed by the community as a whole. SCIOs reduce the administrative burdens for charitable companies of reporting both to Companies House and the Office of Scottish Charity Regulator ( OSCR). They are also able to set up their own wholly owned subsidiaries, such as a trading company to carry out commercial activities. The Group concludes that a SCIO should therefore be included as an eligible constitution for an 'appropriate community body' in Part 2 of the Land Reform (Scotland) Act. ^[10]

25 Many communities have named their 'appropriate community body' a Trust, notwithstanding the fact that they are legally constituted as companies rather than trusts. A significant number of these bodies are also not called Trusts However, for consistency and clarity, the Review Group refers here to these 'appropriate community bodies' that are owned and controlled by local communities on their own behalves, as Local Community Trusts or LCTs.

26 The Group notes that LCTs exist to implement projects in a community, rather than to represent its views. This should be the role of CCs but in many cases LCTs fill a vacuum if CCs are moribund or ineffective. Within LCTs, the voting membership which elects the Directors of the LCT are those members of the community who have signified their agreement to being a member, as this is a requirement of company law. ^[11] Their primary role is to take forward the acquisition and management of land and property for community benefit.

27 CCs and LCTs are part of a much wider and diverse community sector. Within an active community, there can be many other different locally based community groups including associations, clubs and societies. There can also be other community based land owners and other forms of community businesses or social enterprises. These can involve a range of different legal constitutions including other companies and SCIOs, Community Interest Companies, Community Benefit Societies and others.

28 The Group considers that while there should be an agreed set of criteria which define an 'appropriate community body', the Government should be flexible in terms of which legal structures are eligible. The Review Group recommends that there should be a clear focus in public policy on supporting appropriate local community bodies that are owned and managed by local communities acting on their own behalves.