The land of Scotland and the common good: report

Section 26 - Crofts

10 The Crofters Holdings (Scotland) Act 1886 created crofts and crofting as a distinct form of agricultural land tenure in Scots law. The Act only applied to crofts in seven of the counties in the Highlands and Islands - Shetland, Orkney, Caithness, Sutherland, Ross and Cromarty, Inverness, and Argyll. These therefore became known as the Crofting Counties.

11 The total area still under crofting tenure in those former counties is around three-quarters of a million hectares, with around 538,000 hectares of that consisting of common grazings shared by crofters. ^[6] There are around 18,000 crofts (including those that are rented and occupied), with the greatest concentrations in the Western Isles (6,000), Skye and some other islands in the Inner Hebrides (1,840), the Shetland Islands (2,700) and on the north and west coast of the mainland (2,300). ^[7] There are considered to be 10,000-12,000 crofting households with a population of around 33,000. ^[8] A survey in 2007 indicated that, on average, 30% of the income of crofting households came from crofting. ^[9]

12 Crofting tenure has played a well recognised historical role in helping maintain communities in economically remote and fragile locations. The report of the Committee of Inquiry into Crofting in 2008 ('the Shucksmith Report') highlighted the continued relevance and importance of crofting and crofting communities for a wide range of social, economic and environmental reasons. ^[10] The Review Group fully endorses this view. The Group also acknowledges the longstanding and distinctive contribution that crofters and crofting communities have made to promoting land reform in Scotland.

13 During the Group's inquiry, three particular topics related to crofting were prominent. These were the notorious complexity of crofting law, the arrangements in Part 3 of the Land Reform (Scotland) Act 2003 governing the Crofting Community Right to Buy, and the future of the Scottish Government's crofting estates. Each of these is considered in turn below, after some contextual background about the Crofting Counties.

26.1 The Crofting Counties

14 The fact that the Crofters Act in 1886 only introduced crofting tenure in the seven most northerly and westerly counties in Scotland, has tended to encourage a view that crofters and crofting have always been something distinct to those areas. However, at the time, there were crofting communities throughout the Eastern and Central Highlands as well.

15 A croft is simply the Scottish term for an agricultural smallholding that only provides the crofter with a part time means of subsistence or income. In the subsistence agriculture of medieval times, there were crofts throughout Scotland, as evidenced by historical records and place names on maps. By the 18th century, the commercialisation of agriculture and re-structuring of holdings by land owners had started the reduction of crofts in lowland areas. By the beginning of the 19th century, the clearance of crofting communities to make way for sheep and deer had begun in the Eastern and Central Highlands. This spread north and west through the Highlands and Islands, with increasingly extreme approaches being used to clear communities as the century progressed. This resulted in particular unrest by crofters in the north and west, which lead to the appointment in 1883 of a Royal Commission of Inquiry into the Conditions of Crofters and Cottars in the Highlands and Islands. As part of the Inquiry, the Chairman Lord Napier and colleagues sailed from Glasgow. They took evidence from crofters up the west of Scotland, along the north coast and in Orkney and Shetland Islands, before returning to Glasgow. The Commission's report was published in 1884 and is seen as the precursor of the 1886 Act, which gave resident crofters security of tenure, rights of succession, fair rent and compensation for improvements.

16 The Napier Report did not lead directly to the 1886 Act in terms of its recommendations, but did inadvertently determine the area covered by the Act. The Government at the time of the Act was keen to limit the impact of the measures to be introduced on land owning interests. However, initial criteria proposed by the Government to define the counties to be covered such as the small average size of the holdings, common grazings and the existence of Gaelic or a distinct dialect, applied equally to all the counties north of the Highland line. The Government therefore decided simply to limit the application of the Act to those counties visited by the Napier Commission. Thus, if a county did not include any of the west and north coast, it was excluded. An amendment in Parliament to include the counties of Nairnshire, Moray, Banffshire and Aberdeenshire was defeated by 'only' 126 to 87 votes. ^[11]

17 Thus, due to political expediency, there were only seven counties included, and as a result, crofting communities in the Eastern and Central Highlands continued to decline without the protection of the 1886 Act. If twenty more MPs had voted in 1886 for the amendment rather than against it, the history of those communities would have been different. The Group draws attention to this 'politically expedient line' drawn through the Highlands as it continues to be significant today, in ways not directly related to crofting. The most conspicuous example within the context of this report is that when the Highlands and Islands Development Board was set up in 1964 to counter depopulation, the government of the day used, essentially, the same boundary again effectively excluding much of the Highlands. Thus, today with its successor Highlands and Islands Enterprise ( HIE), Highland communities in the Eastern and Central Highlands in places like Upper Deeside and Highland Perthshire still do not receive the same public support as those on the other side of the line (see Section 19 of this Report). At a wider level, the creation of Highland Region (now Highland Council) in 1975 based on similar boundaries, re-enforced a perception that the Scottish Highlands start at the Drumochter Pass.

26.2 Crofting Tenure

18 The Crofters Holdings (Scotland) Act 1886 both established crofting as a distinct form of tenure and created a Crofters Commission to oversee the operation of the Act. However, under the Smallholders (Scotland) Act 1911 covering the whole of Scotland, crofters became smallholders and the Crofters Commission was abolished, with its powers and responsibilities being transferred to the Scottish Land Court established by the Act. ^[12] The Crofters Holdings (Scotland) Act 1955 then re-established crofts and crofting as a distinct form of land tenure in the seven Crofting Counties and created a second Crofters Commission, while retaining the involvement of the Land Court in crofting.

19 While the 1955 Act re-established crofting tenure as it essentially exists today, there has continued to be important crofting legislation since. A particularly significant development was the Crofting Reform (Scotland) Act 1976 which, amongst other measures, gave crofters a right to acquire ownership of their croft from their landlord if they chose to do so. Fig. 29 shows that, while the total number of crofts has remained very similar since the 1955 Act, the number of crofters who have become owners of their crofts has continued to increase since 1976 and now accounts for around 25% of all crofts. However, the concept of owner occupied crofts has continued to give rise to issues in crofting law since the 1976 Act. In the Crofters (Scotland) Act 1993, which consolidated crofting legislation since 1955 and is now the primary legislation governing crofting, the statutory definition of a crofter remained as the tenant of a croft. This continued to be the case until the Crofting Reform (Scotland) Act 2010.

20 One of the policy intentions of the 2010 Act was to equalise the rights and duties of owner-occupier and tenant crofters as much as possible. The Act, which came into force 35 years after the 1976 Act, defined owner occupier crofters in crofting law for the very first time. However, issues have continued to arise, as reflected in the need for the Crofting (Amendment)(Scotland) Act 2013 to resolve difficulties over enabling owner-occupier crofters to decroft their land.

21 Prior to 2010, the Scottish Parliament had already experienced the complexities and strong views associated with crofting during the passage of the Parliament's first Crofting Act in 2007. A historic component of this Act was to enable the creation of new crofts, both within the crofting counties and in other areas outwith the boundary, designated for the purpose by Scottish Ministers. However, there was significant disagreement between the Parliament's Environment and Rural Committee and Ministers over aspects of the Bill which led to the Act. As a result, the Scottish Government dropped parts of the Bill and established the Shucksmith Inquiry into Crofting. The Committee's recommendations led to some of the changes introduced in the 2010 Act.

22 One of these changes is the requirement for Registers of Scotland to establish and maintain a map-based register of crofts and crofting interests. There has never been a complete or up to date register of crofts, despite the requirement for one in previous legislation. As the Shucksmith Report commented " An accurate and current Register of Crofts is a prerequisite for effective regulation of crofting". ^[13] Amongst other significant changes in the 2010 Act were separating the Crofters Commission's regulatory and development functions by transferring the latter to HIE, and the re-naming of the Commission as the Crofting Commission with a Board consisting mainly of elected crofters rather than Ministerial appointees.

23 Despite the reforms to date, further legislation is still required. During the recent passage through the Scottish Parliament of the 2013 Amendment Act, witnesses gave " evidence about the many problems in the existing legislation that were causing difficulties for crofters. landlords and others". ^[14] As a result, the Scottish Government undertook to investigate these issues. In addition, the Crofting Law Group, an informal group of experienced experts in crofting law, was established to " collate the issues and problems that are causing difficulties, prioritise them and indicate how the problems can be resolved". ^[15] The intention is that this " initiative will hopefully assist the Scottish Government in deciding what to do next with crofting law. It is a notoriously complex area of the law". ^[16]

24 The Crofting Law Group plans to submit a report to Ministers in Spring, 2014. The Scottish Government is committed to reviewing crofting law and began formal engagement with key crofting stakeholders at a meeting in December 2013. ^[17] Another meeting is planned and it is presumed that there will be a public consultation in due course on the measures being proposed. The Review Group anticipates that the proposals will be detailed considerations which address technical inconsistencies, ambiguities and other problems with the current legislation. The great danger is that further measures simply add to the complexity of crofting law, rather than reduce it. During its inquiry, the Group noted the following social media comment from an eminent commentator on crofting, " To solve crofting law complexity, scrap lot and start again with clean sheet. Each Act always makes things worse". ^[18]

25 The Review Group considers that crofting law needs to have a continuing process of modernisation that includes reducing the complexity of the law as a key underpinning objective. Apart from the problems in administering the current law, the complexity holds back the development of crofting, including the development of new crofts. Crofting law is too easily seen as an uninviting disincentive to new crofters, particularly those outside traditional crofting areas. The Group recognises that inevitable tensions exist between safeguarding features which have long protected crofting and the aim of creating a less complex legislative framework. It is also important to recognise the diversity which exists within the overall crofting community, for example, between the histories and cultures of crofting in the Western Isles and crofting in the Shetland Islands.

26 The Review Group recommends that developing a modern and robust statutory framework for crofting should be a priority for the Scottish Government. The Group considers that the crofting community should be at the heart of any such process, and have a clearly defined role within it. The Group further recommends that reducing the complexity of crofting legislation should be an underpinning principle of any such process.

26.3 Crofting Community Right to Buy

27 In the last 20 years there have been two pieces of legislation intended to encourage crofters to become the collective owners of the land that makes up the 'crofting township' or settlement of which they are a part. The first was the Transfer of Crofting Estates (Scotland) Act 1997 which enables Scottish Ministers to dispose of a crofting property which they own to an approved body, which is representative of the crofting interests in that property. The 1997 Act and the Government's crofting estates are considered in Section 26.4.

28 The other legislation with this intention is Part 3 of the Land Reform (Scotland) Act 2003. In contrast to the pre-emptive right to buy given in Part 2 of the Act to local communities (to purchase registered land if the land comes up for sale), Part 3 gives crofting communities a right to buy whether or not the land is for sale or the owner is willing to sell, where the acquisition can be shown to be in the public interest. A subsequent amendment to Part 3 of the Act, through the Crofting Reform etc Act 2007, also empowered the crofting community to acquire leases over any land involved. The aim of this was to reduce the risk of leases being used as an avoidance measure by land owners.

29 The existence of the Part 3 right to buy has generally been enough to encourage successful negotiated purchases by crofting communities of their crofting townships from private land owners. In the one situation where a crofting community has sought to exercise the right, Pairc Estate on the Isle of Lewis, the legislation survived legal challenges by the Estate owner and eventually resulted in the community and owner agreeing to negotiate a final settlement. Importantly, the Court of Session upheld the framework of Part 3, within which is the responsibility of Scottish Ministers to determine whether exercising the right would be in the public interest in any particular situation. ^[19]

30 While the Review Group recognises Part 3 of the Act to be pioneering legislation, it considers that a number of amendments should be made to the provisions in Part 3. While the legislation should be robust enough to protect the legitimate interests of land owners, the aim of these amendments should be to reduce unnecessary burdens on the crofting community in exercising the right, and to reduce the risk of challenges to the right. In particular, the Act should be tightened to prevent the kind of challenges which are based on exploiting ambiguities within the requirements that communities have to fulfil in exercising the right. The Group considers that these amendments will, make the Act more effective in encouraging negotiated settlements and more workable if the right to buy is exercised.

31 Two particular aspects of Part 3 which the Group considers should be improved are those defining the residents of the community and mapping the land involved. ^[20] While clarity over the definition of residents is necessary for determining the members of the crofting community body seeking to acquire the land, it is also necessary to determine those eligible to vote in the ballot which is required within the acquisition process. Clarification of these provisions should mean that the community body can more readily identify the residents as defined, and that ballots are less open to challenge on technicalities.

32 The current mapping requirements in Part 3, and the associated statutory regulations, are extraordinarily complex and potentially extremely difficult to fulfil. ^[21] The Review Group considers that the requirements are both unnecessarily onerous on the community body and create needlessly fertile territory for hostile challenges. The mapping requirements go far beyond that which would be required by the Keeper of the Registers of Scotland in order to register title to ownership of such land. The Group consider that the mapping requirements should be substantially simplified, and brought into line with the requirements of registering a title to land.

33 Another aspect of Part 3 which should be amended is that of 'eligible additional land'. This is land owned by the owner of the croft land covered by the application, which is not covered by crofting tenure. ^[22] The Review Group considers that eligible additional land should not be restricted to that owned by the owner of the croft land, not least to reduce the risk of an owner conveying such land into separate ownership as an avoidance mechanism. Under the current provisions, other eligible additional land already has to be referred by Ministers, to the Scottish Land Court, as a safeguard where the owner of the land has not consented to its sale. Consideration should also be given to modifying the requirement that the purchase of this other eligible land is " essential to the development of the crofting community". ^[23] 'Essential' is potentially difficult to establish and as such, vulnerable to a hostile challenge. The Group recognises that changes relating to eligible additional land would need to be considered in the context of European Court of Human Rights ( ECHR), Protocol 1, Article 1, for their implications for the rights of land owners.

34 Given the general complexity of the application process, the Review Group considers that there should be an appropriate provision to enable errors or omissions in the application to be rectified - even if future improvements are made to simplify the application process. Errors and omissions can come to light in the consideration of an application by Ministers, and the Group considers that options other than outright rejection should also be available to Ministers. ^[24]

35 In addition to the suggested improvements to Part 3 of the Act, and as proposed for local community bodies earlier in this Report, the Group considers that crofting community bodies should also have the option to be constituted as a Scottish Charitable Incorporated Organisation ( SCIO) rather than just a company limited by guarantee (as described in Section 15). ^[25]

36 The Review Group considers that the provisions of the Land Reform (Scotland) Act (2003) Part 3 impose unnecessary burdens on the crofting community in exercising the right to buy and that the ambiguities in the requirements that they have to fulfil can be exploited through unwarranted challenges to the exercising of that right. The Group recommends that the provisions in the Act should be amended to reduce these unnecessary burdens, to reduce the risk of unwarranted challenges and to make other improvements to the provisions.

26.4 Scottish Government Crofting Estates

37 Scottish Ministers own a number of crofting estates spread throughout the former Crofting Counties (Fig. 30). These estates cover over 95,000 hectares, with 99% of the land under crofting tenure. There are currently around 1,556 crofts on these estates, which represents nearly 9% of all crofts in Scotland. ^[26] These estates also include a small number of other agricultural holdings. There are, in addition, shooting and fishing leases on some of these estates as well as lets for masts, quarries and other items.

38 This substantial public holding nearly all resulted from the government land resettlement programmes which occurred between the 1890s and the 1950s. While the Scottish Government's crofting estates are a legacy of these historical processes, the Review Group considers the issues below within the context of what the future of these estates should be.

Origin of Estates

39 The land settlement programmes involved the Government both acquiring land to create new holdings, and funding the creation of new holdings on private land. They started in the Highlands and Islands following the Congested Districts (Scotland) Act 1897. This was subsequently expanded to cover all of Scotland through the Smallholders (Scotland) Act 1911. There was then a substantial increase in the programme following the Land Settlement (Scotland) Act 1919. After 1930 the programme was mainly concentrated in lowland areas, and the limited resettlement after the Second World War had effectively come to an end by 1955. By that time, the Secretary of State for Scotland had become owner of 178 land settlement estates covering 182,000 ha and with 3,400 holdings. Government funding had also helped create 1,600 holdings on 142,000 ha of private land. ^[27] The Land Settlement (Scotland) Act 1919, including its compulsory powers, still remains in force, but appears not to have been used for over 50 years.

40 These government land settlement programmes which occurred in Scotland during the first half of the 20th century, should be regarded as a major episode of land reform. The Government's crofting estates are a legacy of that land reform. While part of the original intention with these estates was that crofters would become owner occupiers on a 50 year purchase arrangement, only the tenants on Glendale Estate on Skye stuck with this option. This Estate had been acquired by the Government in 1904 and in the mid 1950s, the Glendale crofters became individual owners of their in-bye land and collective owners of the hill grazings and other estate assets. ^[28] This continues to be the case. However, the crofters on all the other estates remained tenants. While successive governments then sold off the land settlement holdings outwith the Highlands and Islands, this has never been such a straightforward proposition with the crofting estates.

41 Following the Crofting Reform (Scotland) Act 1976, the Government started to sell individual crofts to tenants and continues to do so in response to requests., The crofting tenants have a statutory right to acquire their individually occupied land at fifteen times their annual rent. In the late 1980s, Government interest in disposing of more crofts developed into discussions with the Scottish Crofters Union about crofters acquiring a whole estate themselves as a crofting trust. The Scottish Office then carried out a pilot study looking specifically at the Government's estates on Skye and Raasay. ^[29] As part of that, a crofting trust structure was developed for the body to take over the ownership and management of an estate. While the crofters turned down the proposal to take over these estates, the crofting trust structure developed has had a continuing relevance. This structure, based on a company limited by guarantee and with charitable status, was the model used by the Assynt Crofting Trust when they purchased a private estate in 1993. The same model has also been used by community land owners since.

42 Since the 1990 pilot study, the Government has also continued to be involved in discussions about crofting trusts . These resulted in the Transfer of Crofting Estates (Scotland) Act 1997 under which the Government could dispose of estates to the crofters on an estate. The only example to date of a crofting community acquiring an estate through the terms of the Act has been the West Harris Trust ( WHT), which acquired three contiguous Government crofting estates covering over 16,000 ha in 2010. Despite the apparent interest of Scottish Ministers in disposing of crofting estates to crofters, the process took three years and included many frustrations for the WHT. ^[30] Many of the issues which arose during the process have been discussed earlier in this report, including the interpretations of the Scottish Public Finance Manual and State Aid provisions, and the reluctance of the BIG Lottery to fund the acquisition of public land (see Section 18).

Current Position

43 The Scottish Government Rural Payments and Inspections Directorate ( SGRPID) manages the Government's crofting estates and their statistics describe the Government as having 58 crofting estates. However, the word 'estate' is being used in the sense of legal rights in land and does not imply anything about the physical scale of the 'estate'.

44 As shown in Fig. 31, 17 or nearly 30% of the 'estates' are residual interests following previous disposals. Amongst the remaining 41 properties, the 13 in Caithness and Ross and Cromarty are all less than 200 ha in size and mainly under 50 hectares. These properties mainly have one tenant and at most two. They appear to be the residual final holdings, following previous disposals from these east coast properties.

45 While there are other relatively small scale properties, the table below reflects that 93% of the land and 92% of the croft lets in the Government's overall crofting estate are in Skye and Raasay, the Western Isles and Sutherland. Nearly all of the 18 properties in these areas are estates over 1,000 ha and have a minimum of 20-30 or more crofting lets. Three estates are over 10,000 ha and three have more than 100 crofts lets. The largest estate is Kilmuir on Skye covering 18,765 hectares which has 372 crofting lets.

46 The Scottish Government currently earns an average of around £200,000 a year from its overall crofting estate, from croft rents and other leases. ^[31] In addition, there is income from property sales which is considered to be an average of around £500,000 a year. However, no figures are readily available for the Government's average annual expenditure for the management of the estates, with different components of the expenditure recorded in various parts of the government. The supposition has always been that, as was the case in the 1990 Skye and Raasay pilot study, the costs of administering the estates and fulfilling the landlord's responsibilities have meant that the Government's overall crofting estate is a net cost on public funds each year.

47 In considering the future ownership of the crofting estates, the Government's "current ongoing policy is to dispose of these properties" where this can be done in one of three ways. ^[32] These are, firstly, under the statutory right of a crofter to acquire their croft; secondly, under the 1997 Transfer of Crofting Estates Act; or thirdly, for non-croft property, by sale on the open market.

48 With the first two ways, the Government can be described as having a reactive approach in that SGRPID just responds to requests. SGRPID has, for example, neither investigated what potential there might be for crofting trusts or crofting communities to take over the ownership and management of some of the main estates, nor encouraged any interest in doing this. ^[33] Against that background, the Review Group is concerned that the continuing sale of non-croft assets could in some instances, be inadvertently reducing potential income sources which might assist future community ownership.

49 There are many reasons why crofters have traditionally been, and might continue to be, content to have the Secretary of State for Scotland and now Scottish Ministers as their landlord. The Review Group supports the Government's policy of only disposing of croft land from the crofting estates, where the crofters themselves request to do it either individually or collectively under existing legislation. The Group anticipates that the number of small properties will continue to reduce through acquisitions by individual crofters. However, the Group's view is that the Government should be giving more consideration to the position of the larger estates.

50 Scottish Ministers have made clear that they would like to see more of the crofting estates become owned by crofting trusts and crofting communities. The Review Group supports that aim. The scale of some of the estates also means that progress in that direction, could start to make a significant contribution to the Government's policy of increasing local community land ownership by over half a million acres (202,429 ha.) by 2020. However, the Group considers that in order to achieve this, the Government needs to have a more pro-active approach than at present.

51 A basic requirement for making progress with this ambition is to address the types of obstacles faced by the West Harris Trust ( WHT). Central to the barriers encountered is the price at which estates can be transferred to crofting communities under the 1997 Act. Ministers should be able to transfer an estate to an appropriately crofting body at reduced or zero cost and without the transfer falling foul of State Aid, where Ministers judge that this would be in the public interest. The 1997 Act should be amended if necessary to establish this in statute.

52 There would appear to be no logic to the circulation of public funds which characterised the WHT acquisition. In addition, it is instructive to contrast the differing experiences of the West Harris crofters and the Glendale crofters. While the Glendale Crofters became owners of their estate at no cost after 50 years of annual payments, the other crofting communities (including West Harris) have been paying rent for much longer - over 100 years in some cases. It is also worth noting that when the 1997 Act was introduced, there was a clear policy intent that land would be transferred to crofting trusts at no cost, where Ministers considered that justified. Speaking to the House of Commons Scottish Grand Committee, the Secretary of State for Scotland who was responsible for taking the Act through Parliament, stated that " Such is our commitment to this cause that we are even prepared, if the circumstances justify it, to transfer certain crofts free of charge… Our aim is to make sure that crofting trusts get off to a good start and succeed". ^[34]

53 The Review Group considers that the Scottish Government should clearly establish that crofting estates can be transferred to appropriate crofting trusts and crofting community owners at a reduced or zero cost and set out the circumstances within which this would be the case. This change would, in itself, be likely to increase the level of interest in taking over some estates. The Group understands, for example, that the crofters on the 11,000 ha Keoldale Estate in Sutherland previously did not pursue the possibility of taking over that estate, because of the potential cost of the acquisition. it would not be transferred for free.

54 The Group considers that the Government needs to take a more pro-active interest in starting to identify which crofting estates might have the potential to be transferred to crofting trusts and crofting community owners. The Group considers that this interest should not be directly through SGRPID with its landlord responsibilities, but through HIE or the Community Land Agency ( CLA) recommended in Section 19 of this report. The context for crofting communities considering their options has changed significantly in recent times, with the increase in the number of crofting community owners that have acquired estates from private land owners. These are concentrated in the same areas as the Government's crofting estates in the North West Highlands and Islands. Experience to date demonstrates that crofting community ownership can open up economic opportunities and reverse the fortunes of what are often fragile and marginal communities.

55 The Review Group considers that crofting trusts or crofting community owners should be able to purchase Scottish Government crofting estates at less than open market value. The Group recommends that Ministers direct the Scottish Government to make provision for this to happen and to clarify the circumstances under which this can occur. The Group also recommends that the Government should take a more pro-active approach to facilitating and supporting such transfers.