Land Reform (Scotland) Bill: Fairer Scotland Duty assessment summary

Land Reform (Scotland) Bill: Fairer Scotland Duty Assessment Summary

Title of policy: Land Reform (Scotland) Bill

Summary of aims and desired outcomes of Policy:

The Bill aims to further improve transparency of land ownership, help ensure large scale land holdings deliver in the public interest, and empower communities by providing more opportunities to own land and have more say in how land in their area is used.

The Bill provides for a land management tenancy, a new kind of lease to enable more people to engage in a wider range of activities on land that promote both climate and nature objectives and new ways of working. The Bill also aims to improve the rights of tenant farmers and small landholders so they are not disadvantaged compared to farmers who own their land, and are able to actively participate in climate change mitigation and adaptation. It provides small landholders with similar rights to other forms of farming tenure.

Directorate: Directorate for Agriculture and Rural Economy (ARE)

Division: ARE: Land Reform, Rural and Islands Policy

Team: Land Reform Bill Team

Summary of evidence

As part of this Fairer Scotland Duty Assessment research evidence and stakeholder evidence was gathered to assess the potential impact of the Bill on socio-economic disadvantage.

Research

The land reform policy proposals in this Bill are targeted towards rural communities, following the approach in the original Scottish Land Commission (SLC) report ‘Investigation into the Issues Associated with Large scale & Concentrated Landownership in Scotland’^[1]. Agricultural holdings and small landholdings are also situated in rural areas across Scotland although evidence on the number of agricultural tenants, small landholders and landlords experiencing socio-economic disadvantage is not held centrally.

The Scottish Government publication ‘Poverty in rural Scotland: evidence review’^[2] published in December 2021 summarises a range of evidence sources on rural poverty. This report made use of the Scottish Government’s two fold Urban-Rural classification which defined rural areas as settlements of less than 3,000 people.

The report concludes by suggesting that, although rates of poverty are lower in rural Scotland, rural poverty may not be easily identifiable within income and deprivation measures as they do not take into account the higher cost of living. Indeed, the evidence suggests that many rural households are at risk of poverty due to their high expenditure on travel and fuel.

Some parts of rural Scotland have been categorised as ‘fragile areas’ and/or ‘employment action areas’ by Highlands and Islands Enterprise^[3]. These areas are characterised by declining population, under-representation of young people within the population, lack of economic opportunities, below average income levels, problems with transport and other issues reflecting their geographic location.

Highlands and Island Enterprise found that, typically, the minimum cost of living in remote rural Scotland ranged between 10% and 35% more than the equivalent in urban Britain in 2016. The additional costs are mainly from shopping, broadband, delivery costs, transport, childcare, and fuel costs. More recent research has shown that additional minimum living costs for households in remote rural Scotland typically add 15-30% to a household budget, compared to urban areas of the UK.^[4] In 2019, the fuel poverty rate for remote rural (43%) households was higher than for urban (24%) households or rural households (29%)^[5].

Communities living on or nearby land with concentrated land ownership

Land ownership in Scotland is highly concentrated, with the estimated proportions of Scotland’s land made up by landholdings within scope of the Bill. A report published by Andy Wightman in March 2024^[6], suggests that 433 landowners own 50% of the privately-owned rural land^[7] in Scotland.

In 2014, the Land Reform Review Group (an independent review group established by the Scottish Government in 2012), published their final report.^[8] This report was informed by a public call for evidence receiving 484 submissions, a wide programme of meetings and stakeholder visits. This report noted the current concentrated pattern of private land ownership in rural Scotland, noting that “As a measure of inequality in a modern democracy, this is exceptional and is in need of explanation”^[9]

In early 2016 the Scottish Government published research on the impact of diversity of ownership scale on social, economic and environmental outcomes. The researchers found that land ownership scale is one of many factors that influence the economic, social and environmental development of rural communities, however they were unable to disentangle the effects of land ownership scale from these other factors such as accessibility to urban areas^[10].

In early 2018, the Scottish Land Commission (“the Commission”) issued a public call for evidence, inviting people with experience of living and working in communities where most of the land is owned by a very small number of individuals to share their experience. Over 400 responses were received to this call for evidence, with follow up interviews conducted with a representative sample. Broadly similar numbers of people who identified as residents of communities in areas of concentrated landownership and people who identified as landowners or land-managers were selected.

The analysis of this call for evidence was published in 2019, as the report ‘Investigation into the Issues Associated with Large scale and Concentrated Landownership in Scotland’^[11]. This report concluded that:

In some parts of Scotland concentrated landownership appears to be causing significant and long term damage to the communities affected.^[12]

Research by Annie McKee in the ‘Journal of Rural Studies’ (2015)^[13] found that historical power relations and persistent hierarchies inhibited rural community empowerment in land management decision-making in Scotland. Additionally, a lack of support for proposed community land-based activities by a single landowner can have disproportionate local impacts where the scale of the landholding means that there are limited or no alternatives for the community^[14].

Where land continues to be transferred at scale this restricts who can purchase land due to the size and value, this may lead to the supply of land being insufficient in particular areas which impacts on the sustainability of those communities. Recent years have seen rising land prices in Scotland’s rural land market^[15], with community interviews highlighting views that this is having impacts including pricing out individual farming businesses from expansion, reducing new entrant farming land access, and restricting opportunities for community organisations to utilise right-to-buy mechanisms^[16].

The Just Transition Commission has recognised that the current concentrated nature of Scotland’s land ownership, noting ‘without careful design and meaningful engagement there is a risk that benefits may flow mainly to large landowners and opportunities for community benefit will be missed”^[17]

Concentration of land ownership may also have a negative impact on the frequency with which land is available for sale in an area, as large landholdings are transferred less often. Land is an important and finite resource for a country. In the Scottish context, issues of concentration of land can lead to issues of a lack of supply of land. Without a sufficient or adequate supply of land, many important social, economic or environmental objectives obviously may be more difficult to achieve, with wider impacts for communities.

Stakeholder Evidence

The evidence above was supplemented by stakeholder evidence from the consultations which asked several questions on potential impacts of the proposals, including a question on anticipated impact on groups or areas at socioeconomic disadvantage. The responses to this question in the consultations may be found in the published analysis of the three consultations:

• Land Reform in a Net Zero Nation: Analysis of responses to the consultation exercise (www.gov.scot)
• Small landholdings modernisation: consultation - gov.scot (www.gov.scot)
• Agriculture Bill: consultation analysis - gov.scot (www.gov.scot)

The assessment findings taking into account the evidence gathered are set out below.

Summary of assessment findings

Responses to consultation, stakeholder engagement and internal workshops in relation to potential socio-economic impacts have been considered in relation to the Bill.

In relation to the Land Reform measures, some stakeholders have suggested that the proposals may have no impact on some of the most disadvantaged areas of Scotland as they are concerned only with rural issues, which excludes urban and peri-urban areas. However as highlighted above, while high level poverty statistics indicate lower levels of poverty in rural areas, there are unique challenges faced by rural communities. In their 2019 report to Scottish Ministers, the Scottish Land Commission noted “Our recommendations here are targeted to addressing ownership primarily in a rural context because this is where the evidence has so far identified pressing issues. We are also conscious that applying measures that are targeted for a rural landholding context to a general urban property market situation risks unintended consequences.”^[18]

During consultation and stakeholder engagement, some landowners and representative organisations have suggested that these measures could have a negative impact on inequalities of outcome in rural communities through disincentivising new investment in land, and making existing landowners less likely to invest in ways that may benefit communities, such as providing housing.

This argument has been made in respect of previous land reform legislation seeking to improve the rights of communities (such as in respect of the introduction previous community rights to buy). There is little evidence to support the view that land reform measures impact the attractiveness of land as an investment or existing landowners' ability or willingness to invest in their property. Continued land price increases in Scotland’s rural land market suggest high demand and competition^[19]. The impact of the measures in the Bill would however be monitored.

For the pre-notification proposal, some consultation responses highlighted that few communities are likely to be able to purchase landholdings over 1000 hectares . Other responses and stakeholder engagement highlighted the beneficial impact that smaller parcels of land may have for communities. Based on this, the decision was made to apply these measures to partial sales from a landholding over 1000 hectares rather than only to sales over 1000 hectares .

From the consultation exercise, which was used to inform the development of the Land Management Tenancy, small landholding, and agricultural holding measures, one potential negative socio-economic impact was identified by a consultee. In the small landholding modernisation consultation, a consultee commented that the proposals could lead to a decline of small agricultural tenancies outside of the crofting areas, and could further restrict access to land for small-scale and local food production in rural and remote areas. In order to address this impact and strengthen the policy, the Bill makes provision for the Tenant Farming Commission to issue a Code of Practice on the creation of small landholdings. This has the potential to encourage the creation of small landholdings across Scotland and clarify how to enter into a small landholding.

All Bill proposals will be kept under review. Further stakeholder engagement will take place throughout the Bill process and if evidence emerges of negative socio-economic impacts then the policy can be adjusted as appropriate. Throughout the development of regulations consideration will be given to the socio-economic impacts.