Harnessing islands resources
The principles of subsidiarity and local decision-making underpin this prospectus, not least in the area of marine resource management and utilisation. Local communities across our islands should be primary beneficiaries from income extracted as rental and royalty payments on activity around their shores. This should especially be the case where the exploitation of those resources is primarily for national benefit, has significant environmental, community and social impacts and carries significant environmental risks.
Our vision is that future development of the islands and the seas around them are planned and managed for all our benefits through an agreed arrangement of national, regional and local partnerships, with the Scottish Government and local authorities as central partners having a share in these responsibilities.
The Islands Councils have strong track records stretching over 40 years in local management and commercial extraction of marine resources, through formal arrangements such as works licensing under the Zetland and Orkney County Council Acts and agreements with the oil industry. These arrangements have worked well to local and national benefit.
The Scottish Government is clear that our energy future lies in renewables playing a key role in a balanced energy mix, which represents a far more cost-effective means of electricity generation than the next phase of expensive nuclear plants that the Westminster Government is committed to build. Renewable energy resources present an opportunity to bring about a transformational change to island economies. Scotland's islands have seized the potential of their natural resources to support community ownership and development such as on Eigg and Gigha, whilst Shetland is set to benefit from a local ownership stake in the Viking windfarm proposal which has the potential to bring up to £30 million revenue a year to the local community.
With the right support, the three Island Areas combined have the potential to supply up to five per cent of GB electricity demand by 2030 in a clean, green and cost-effective manner that supports local communities.
The Scottish Government believes that independence will allow enhanced deployment of these resources and the full realisation of the associated socio-economic benefits, including through maximising the opportunity for community ownership and community benefits.
Our natural resources include those in our seas and the use of our land. Fishing and aquaculture are two of the most important industries in the islands - by virtue of their contribution to the islands' economies, the direct and indirect employment they provide, and the high level of local ownership. The importance of the fishing industry is amplified by its potential to make a significant long-term contribution to the islands' economies, and by the limited alternatives that can provide comparable levels of employment and local income. At present Scotland receives only 1.4 per cent of the current European Fisheries Fund or 40 per cent of UK allocation, despite representing 58 per cent of sea fishing and 85 per cent of UK aquaculture. With independence we will be able to put aside the current unfair allocation within the UK and negotiate a fairer share of European fisheries budgets reflecting the size of those industries to help our fishing and aquaculture sectors, and the wider seafood processing industry.
Local communities across our islands should be primary beneficiaries from income extracted as rental and royalty payments on activity around their shores.
Farming and crofting are both a way of life and a crucial part of the economies of Scotland's islands. The increasing profile of island produce has significant economic potential for our islands, just as the environment and natural habitat of our islands is a major attraction for tourists. The natural resources of our islands are at the mainstay of island economies.
Principles of community benefit from renewables
The positive effects from our islands' natural offshore renewable energy resources, their industrial exploitation and supply-chain activities may not always be felt by 'host' island communities. Therefore steps should be considered to facilitate community benefit to help to ensure that tangible benefits are realised across island communities.
The principle of community offshore renewables benefit is a 'package' of benefits which can be delivered to island communities in a number of ways. This package should generally be designed in discussion with the community, and should be spread across a geographical area of beneficiaries, and across a framework of topics. In this way, it will be ensured that communities of geography, communities of interest and Scotland as a whole can all maximise the benefits from our renewable energy resource.
The Scottish Government recognises that offshore renewable energy sites vary greatly. This is why these principles are designed to be flexible and open to modification to ensure the most effective outcome is reached for each site.
Community benefit packages will vary from project to project, depending on a range of factors including: scale; technology; location; and nature of the project in question. The principle of community benefit is therefore that each package should be tailored to reflect the characteristics of the development.
As outlined in this prospectus, Aquaculture and Crown Estate rental incomes are particular opportunities for island communities (and others) to secure community benefit that can help to empower them to fulfil their potential.
Role of the Islands Councils
The Scottish Government recognises that Islands Councils can have a central role in ensuring that community benefit is shared equitably and strategically to communities in their island groups. In such cases, the Islands Councils would each be responsible for administering their own fund, including determining how funds are spent, who would benefit and the level of benefit. The Council would have a strategic role in aligning the distribution of benefit with national and local priorities, securing agreement as required within Community Planning Partnerships to assure the direction of benefit towards communities.
In developing community benefit packages the Islands Councils can have a central role in making investment for community ownership to benefit all communities in their island groups, and in ensuring that community benefit can be shared equitably and strategically to all communities in their island groups.
Distinction from compensation
Community benefit provisions should not be confused with any compensatory or disturbance payments or provisions. Any such compensation arrangements should be separate from any community benefit proposals.
Community ownership of renewable energy
In distinction from community benefit, the Scottish Government's target to see 500 MW of renewables in community and local ownership by 2020 has a potential value of up to £2.4 billion over the operating lifetime of those schemes.
This target includes the scope for communities to invest in or share ownership of commercial schemes, and we are working with an industry stakeholder group to maximise this investment opportunity, as well as offering practical support to communities through the Community and Renewable Energy Scheme ( CARES) and the Renewable Energy Investment Fund ( REIF). Community and local ownership of renewable energy is the real prize for communities, including those on the islands, and the Scottish Government is working to realise this ambition.
Community benefits payments from commercial schemes offer a much smaller scale but nonetheless important opportunity to spread the benefits of our renewables resources to communities. In the past 12 months, about £6 million has been provided to Scottish communities from over 3 GW of (mainly) onshore wind schemes.
Crown Estate seabed income from leases and other legal agreements
The Crown Estate is a property portfolio owned by the Crown, and includes a range of land and property, rights and responsibilities in Scotland.
We believe that the marine assets of island communities are key to their future and the wealth that is generated should be reinvested to safeguard that future.
The current responsibilities of the Crown Estate Commissioners enable them to generate income from leasing and other legal agreements in the islands.
The Scottish Government agrees with the Islands Councils that marine activities in the territorial waters of Scotland adjacent to the islands can have impacts on the community as well as delivering financial benefits to the local economy. The Scottish Government committed in Scotland's Future to ensuring the island communities benefit by receiving more than 50 per cent of Crown Estate seabed leasing revenues.
The marine assets of island communities are key to their future and the wealth that is generated should be reinvested to safeguard that future. The Scottish Government will therefore ensure that 100 per cent of the net income from the islands seabed is passed to island communities.
The income from leasing and other legal agreements in the islands associated with the Crown Estate Commissioners' current responsibilities will include, but will not be restricted to, income from leasing and other legal agreements for cables, pipelines, aquaculture, wave, wind and tidal devices, piers, local authority harbours and moorings in territorial waters.
We believe that the marine assets of island communities are key to their future and the wealth that is generated should be reinvested to safeguard that future.
The Scottish Government acknowledges each Council's Community Planning and leadership role for their islands. Net income from activities within 12 nautical miles would be passed to individual Councils and each will be responsible for administering their own fund, including determining how funds are spent, who will benefit and the level of benefit. There is potential for each Council to administer their own fund jointly with development trusts and other types of funds in order to maximise opportunities for pump priming projects that can deliver social and economic benefits and empower local communities.
Resources would be distributed to each Council one year in arrears directly based on net income generated.
As part of these arrangements we wish to remove the lack of transparency associated with the income generated by the Crown Estate Commissioners. Scottish Ministers and the Islands Councils will ensure transparency on revenues generated and how they are spent.
Crown Estate control
The Scottish Government and the Islands Councils recognise that the status quo on the Crown Estate is not tenable and supports reform. The Scottish Government will propose a framework to provide the Islands Councils greater involvement in the management of the Crown Estate marine resources.
This framework will involve local authorities and communities by:
- ensuring that decision making on the Crown Estate is subject to broader objectives including community benefit and community development as well as revenue raising;
- guaranteeing that Councils can influence and plan for how Crown assets in the waters around each group of islands are used through the Councils' lead role on regional marine planning;
- transferring from the Crown Estate Commissioners to the Islands Councils control of the management of the foreshore and the limits of jurisdiction of local authority harbours and marinas, subject to measures to ensure that community aspirations are met. Appropriate arrangements would be developed separately for independent trust ports, community interest company owned/operated harbours and those owned by Caledonian Maritime Assets Ltd ( CMAL) servicing the lifeline ferry network;
- ensuring that Councils and communities are consulted on the strategy for leases and other legal agreements including pricing;
- ensuring the Councils and communities are consulted on novel proposals for leases and other legal agreements; and
- ensuring that the islands can benefit from use of assets currently administered by the Crown Estate Commissioners through the income distribution arrangements outlined above.
In order to properly harness the natural resources of our islands and to empower island communities it is important islands do not just receive income from marine resources but play a part in developing appropriate strategies to ensure their sustainable use.
Independence, along with the transfer of functions from the Crown Estate, provides an opportunity to enhance the role of islands in the sustainable management of marine resources.
Statutory regional marine planning for the Island Areas (to 12 nautical miles) will be formally delegated to local Marine Planning Partnerships, in which the Council will play a lead role. The regional plans which are developed will then bind future decision-making by any public authority impacting the marine environment, allowing the islands to set the strategic direction for their own waters and to promote sustainable development which best reflects local priorities.
Work in this regard is already underway in Shetland. The Scottish Government is also working with Orkney Islands Council, alongside the Highland Council, on a pilot marine spatial plan which will inform future work, with a view to formal delegation of planning powers to both Orkney and the Western Isles by 2016.
The regional marine plan, and appropriate consultation with the Marine Planning Partnership and other local interests, will influence national licensing decisions in relation to large scale commercial offshore developments. Where the delegation of marine licensing powers for other activities can be demonstrated to be beneficial to the operation of the planning system and to promote sustainable development locally, the Scottish Government will take forward such delegation.
The Scottish Government also supports the development of a 'planning brief' approach to issues which require an integration of marine and terrestrial planning, and will take this approach forward with interested partners.
The Scottish fishing industry has much to gain from independence. Supporting our fishing communities and seafood sector will always be a priority for Scottish governments.
Scotland receives just 1.4 per cent of European fisheries funding despite landing 8 per cent of the European Union's wild caught fish and accounting for more than 12 per cent of EU aquaculture production. Scotland is the world's third largest salmon producer with 85 per cent of UK aquaculture production by volume.
With independence, for the first time, Scotland will have a direct say in European fisheries negotiations. Independence will give Scotland's fishermen and those in the aquaculture sector their own distinct voice in Europe, with Scotland participating at every level in the EU policy process.
In 2013 the volume and value of all sea fish landed into Shetland alone was over 73,000 tonnes worth some £73 million.
The Common Fisheries Policy of the EU states 'Small offshore islands which are dependent on fishing should, where appropriate, be especially recognised and supported in order to enable them to survive and prosper.' We support that principle; however we do not believe that this principle has been reflected in the management of the Common Fisheries Policy ( CFP) by the EU or the position taken on fisheries by successive Westminster governments.
Independence opens up the opportunity for direct discussion between Scotland, other EU Member States and the European Commission on the development and application of EU fisheries policy. At present discussions with Europe must be conducted by the UK or on a position agreed with the UK, even where it is not in the interests of either Scotland as a whole or our island communities.
As an independent Member State, Scotland would be fully represented in discussions on the CFP. As part of our commitment to enhancing islands voice the Government will work with the islands to seek to agree with the EU authorities approaches to implementation of the Scottish CFP which reflect this principle.
In 2013 the volume and value of all sea fish landed into Shetland alone was over 73,000 tonnes worth some £73 million.
The Scottish Government proposes that Islands Councils be given collective representation on the Fisheries Management and Conservation Group ( FMAC) and on the Inshore Fisheries Management and Conservation Group ( IFMAC). The Scottish Government will also explore with FMAC the case for an islands sub-group.
Under the reformed CFP, Scotland is represented on the North Sea and North West Waters regional fisheries management groups. With independence the Scottish Government will ensure that islands' interests are given a voice in these groups' discussions where they touch upon issues affecting Scotland's islands.
The Scottish Government sees regional marine planning as a potential framework for supporting devolution of aspects of fisheries management to the islands, alongside other possible mechanisms such as regulating orders.
As Scotland's role increases with the powers of independence, the Scottish Government will work with islands which wish to put forward proposals for regulating orders with a view to developing them, where appropriate, into effective frameworks for local management of inshore fisheries. Such proposals should come from islands and island communities themselves as part of enhanced responsibility for fisheries management.
The Scottish Government will continue to work with the islands on key challenges such as the discard ban to ensure that their particular needs and circumstances are taken into account.
The Scottish Government recognises the scale, importance and further potential of the aquaculture industry for the islands, and commits to close and active partnership continuing between the Government, the Islands Councils and communities and the industry itself.
The Scottish Government is committed to the principle of community benefit generally, and its earliest application, from activity that takes place in the waters around the islands, comes from aquaculture in particular. The Scottish Government has made commitments elsewhere in the prospectus as regards Crown Estate revenues which will apply to aquaculture as a sector.
The Scottish Government sees regional marine planning as a framework for supporting the development and sustainable growth of aquaculture, with due regard to the marine environment, and the islands are well placed to take advantage of the potential opportunity for larger offshore fish farms. The Scottish Government will work with the Islands Councils, the aquaculture industry and those involved in the regulatory framework to develop a 'planning brief' for aquaculture, similar to those that already exist in terrestrial planning, which will underpin the further development and sustainable growth of the sector. The process of developing a planning brief will, inter alia, include a 'Community Benefit Charter' which will seek to maximise the broadest benefits to the community, including but not restricted to more fish farm jobs; more onshore secondary processing jobs; training, further education synergies and local supply chains.
The Scottish Government agrees that the Islands Councils be given collective representation on the Ministerial Group for Sustainable Aquaculture, and that with independence future Scottish governments should reflect island interests in aquaculture discussions at EU Agriculture and Fisheries Council meetings.
To further support the sustainable growth of the aquaculture sector, the European Maritime and Fisheries Fund may assist, within the terms of the Regulation, in the development of aquaculture and onshore processing facilities, and the provision of skills and scientific or technical knowledge through support for training and networking, and elements of marketing and promotion.
Support for the growth of renewables on the islands
The Scottish Government has a long-standing objective for Scottish islands, with their rich natural resources, to participate fully in the growth of renewable energy generation in Scotland. This requires electricity grid connections to the mainland network, long-term renewables support mechanisms and systems of regulation and transmission charging that do not discriminate against renewable energy generators on the islands.
As this Government set out in Scotland's Future, it is unacceptable that consumers now face rising energy prices, increased fuel poverty and the risk that our renewable energy ambitions are not fulfilled. The Scottish islands in particular can play a crucial role in unlocking these issues and that is why, following independence and the establishment of a Scottish regulator, the Scottish Government will ensure that the regulated energy market supports renewable energy generators on the islands and the development of the necessary island grid connections. Using these enhanced powers within a single GB market for electricity and gas, the Scottish Government will:
- Pursue a fairer transmission charging regime for islands renewables in line with moves towards a single integrated market for electricity at EU level. The current GB transmission charging framework discriminates against generators in Scotland and the Scottish Government has campaigned over many years alongside Islands Councils for change that addresses this particular barrier to development of renewable energy on the islands.
- Endeavour to set market support provisions at a level that enables the required island grid connections to be built.
- In taking forward its market and regulatory objectives, have particular regard to European Directive 2009/28/ EC, Article 16(7) which states: " Member States shall ensure that the charging of transmission and distribution tariffs does not discriminate against electricity from renewable energy sources, including in particular electricity from renewable energy sources produced in peripheral regions, such as island regions, and in regions of low population density".
- Consider what additional financial mechanisms can be deployed and what alternative models of operation it could support to enable the delivery of island grid upgrades.
- Provide continued support for innovation and investment in marine renewable technologies, which carry such enormous potential for our island communities.
Stronger representation for the Islands in national energy strategy
Upon independence, Scotland will have responsibility for the oil and gas industry in Scotland's waters. Scotland will also directly benefit from the revenues generated from this resource for the first time since the start of North Sea oil production in 1975.
In Scotland's Future, the Scottish Government sets out proposals to establish a Scottish Energy Fund. This fund will invest revenues from oil and gas production for two purposes: to provide investment for future generations; and to provide income that can smooth receipts from oil and gas revenues. The economic rationale for establishing such funds is powerful and they have been successfully implemented in the vast majority of natural resource-rich countries, with the UK being a notable exception. However, Shetland was able to secure long-term local revenues, through various sources, from the industry's operations at Sullom Voe.
The Scottish Government has actively promoted island communities' role in Scotland's energy future. With independence the Scottish Government will ensure a stronger voice for the islands in the development of the Scottish Government's approach to energy.
The Scottish Government will establish a new strategic energy committee and will ensure there is representation from the Islands Councils alongside the industry regulators and representatives of the industry itself.
With regard to the oil and gas industry, the committee will discuss matters such as upstream licensing and regulation, environmental issues, and decommissioning activities. This will give island communities, for the first time in forty years, a say in the long-term strategic development of the upstream oil and gas sector.
The Scottish Government also plans to establish an Energy Partnership with the Westminster Government to provide for joint control of the approach to the energy market and ensure Scotland's long-term interests are better served. The Scottish Government will explore with the Islands Councils how they, alongside representatives of other key regions, can help steer the Scottish Government's approach under this new Energy Partnership.
Oil and gas community impact
The Scottish Government recognises that oil and gas-related activities can have social and economic impacts on island communities, in terms of both costs and benefits, that must be carefully considered. The Scottish Government agrees in principle that community support should be considered to help offset any adverse impacts.
Upon independence, the Scottish Government will work with the island communities in question to find ways to mitigate any adverse community impacts from oil and gas activities, consistent with our commitments made to the industry set out in Scotland's Future.
Ports and harbour infrastructure
The Scottish Government will seek to maximise the economic benefits to Scotland from the offshore renewables and oil and gas industries, including substantial opportunities in the supply chain. The Scottish Government supports the participation of island businesses in the service sector, including marine energy and offshore decommissioning.
Local authority and trust-owned quayside infrastructure on the islands used by offshore renewables and the oil and gas industries are likely to require upgrading and expansion to ensure Scotland maximises economic benefit from these natural resources. Upgraded facilities may also help the islands access the significant economic opportunities presented by offshore decommissioning in due course.
The Scottish Government will continue to consider financial support to provide a contribution to help fund such capital projects in the islands.
The Scottish Government recognises that oil and gas-related activities can have social and economic impacts on island communities, in terms of both costs and benefits, that must be carefully considered.
Fuel prices and efficiency
The Scottish Government believes that independence provides the opportunity to maximise the benefits of our energy wealth. The planned continuation of a GB-wide market will ensure that Scotland's huge renewable energy resources continue to supply low-carbon energy to GB consumers at cost-effective prices and prevent energy shortages and price spikes across these islands.
The Scottish Government has published Good Practice Principles for Community Benefits from Onshore Renewable Energy Developments, which encourage the drafting of local strategic community action plans to guide community benefit spend to local needs, including targeted energy efficiency improvements, which can help to reduce fuel poverty.
Recent energy price increases highlight more than ever the need to use all the powers available to us to help people with their energy bills. Under independence, Scottish consumers will benefit from having a more powerful regulator acting on their behalf, with strong powers to ensure that markets are working efficiently in Scotland. An independent Scotland will also be free to design a new means of funding and delivering energy efficiency improvements to Scottish homes that is fairer and better suited to our needs.
The Scottish Government is keenly aware of the difficulties facing all households in off-gas areas in keeping their homes warm and their fuel bills down. In particular, it is recognised that delivery of energy efficiency measures is often difficult in Island Areas. To help tackle this issue the Scottish Government is looking to target our funding programmes to best meet the needs of off-gas grid households. The Scottish Government has therefore enhanced support for those faced with fuel poverty by enabling increased uptake of the Energy Assistance Scheme. Scottish Government funding for area-based fuel poverty schemes is distributed across all local authorities in Scotland and is allocated on the basis of need, taking into account levels of fuel poverty and the types of properties within rural and Island Areas. This year's funding will also support delivery in rural and remote areas by providing specific funding to be used to deliver heating and insulation improvements for low income and vulnerable households in off-gas grid properties. As part of the 2014-15 Home Energy Efficiency Programmes allocation to Councils, the three island authorities received over £4.5 million funding to deliver energy efficiency measure to fuel poor households in the islands.
The Scottish Government furthermore offers a wide range of other help to both households and businesses to improve energy efficiency, reduce fuel demand and consequently reduce fuel bills. This involves financial help through grants and loans, as well as advice and support. Where possible, activities also complement UK-wide schemes to make sure households in Scotland can take advantage of initiatives such as the Green Deal, Renewable Heat Incentive, and Feed-in Tariffs.
The current Westminster scheme to address fuel poverty and improve energy efficiency is operated through energy companies. The costs of programmes like the Energy Company Obligation ( ECO) and Warm Homes Discount are met by householders through their energy bills irrespective of income. As set out in Scotland's Future, affordable home energy and the ability of vulnerable consumers to heat and power their homes is of utmost concern and with the powers of independence the Scottish Government will make a permanent and ongoing cut in household energy bills of £70 a year, by removing the costs of the Warm Homes Discount and the Energy Company Obligation from bills.
The Scottish Government will continue to work closely with the islands in developing energy efficiency schemes and would welcome the opportunity with independence to explore what further support can be made available as a result of Scotland's increased responsibilities to understand better the specific difficulties facing island communities in tackling fuel poverty.
Crofting and agriculture
There is a wide diversity of agricultural activity across our Island Areas. For example, whilst crofting is dominant in the Outer Hebrides and Shetland, Orkney's agricultural sector is of a greater scale due to the presence of full-time farming business units, and is the biggest employer outwith the public sector. Location and distance to markets is perhaps the most significant challenge to the viability of the crofting and agricultural sectors across the islands.
The Scottish Government recognises the benefits of crofting and agriculture to the islands, and will continue to work closely in partnership with Islands Councils and communities. Specifically, our wider plans for island-proofing of relevant policies will apply directly with regard to crofting and agriculture.
The Scottish Government is establishing a Crofting Stakeholder Forum to discuss matters of mutual crofting interest. Local government will be invited to participate, and the Government will work with COSLA to ensure proportionate representation for the islands, in light of the importance of crofts to Scotland's island communities. This will help ensure that island crofters are fully represented and engaged with Government policy-making, and can articulate their needs and aspirations directly.
While independence may not affect the management of agricultural policy, it does demonstrate the benefits being an independent member of the EU can deliver. If Scotland had been independent during the last CAP negotiations, we would have qualified for an additional €1 billion in direct farm payments to 2020, and been able to argue for hundreds of millions of Euros more in rural development funding, including significant funds to benefit Scotland's islands.
European regulation and funding arrangements also have an important bearing on island crofters and farmers. With independence, Scotland will be able to negotiate fairer allocations for rural development - similar to those achieved by other Member States such as Ireland and Finland, who have demonstrated what independent countries can achieve within EU negotiations when they are able to reflect their own needs and priorities.
The Scottish Government fully recognises the effects and implications for the islands, and has met with the Highlands and Islands Agriculture Support Group on a number of occasions during the design phase of CAP reform. Views and opinions have been fully taken on board. Despite reduced budgets negotiated at the UK level and the prevailing move to area-based payments, the Common Agricultural Policy ( CAP) package, announced by the Cabinet Secretary for Rural Affairs and the Environment on 11 June 2014, delivers a favourable outcome which will allow many island farmers and crofters to benefit.
The Scottish Government's overall package includes island-specific measures, such as an additional top-up to island beef producers leading to an uplift of around €65 per calf under the Beef Voluntary Coupled Support ( VCS) Scheme in recognition of their higher costs and specific support for Island Areas within the Less Favoured Area Support Scheme ( LFASS), and also includes specific measures for crofters including a separate capital grant scheme within the new Scotland Rural Development Programme ( SRDP).
On looking forward, the Islands Councils have now agreed, at the invitation of the Scottish Government, to nominate representatives to the Rural Development Operational Committee ( RDOC) for the Scotland Rural Development Programme ( SRDP). This will help ensure that our islands continue to be directly involved in decision-making as we move forward into the implementation phase of the new SRDP.
In terms of crofting development, HIE will engage in partnership with others to fulfil its role and promote Crofting Community Development. The Scottish Government will support the engagement of the councils in this regard.
The Scottish Government currently operates the Croft House Grant Scheme, which supports construction of affordable housing on working crofts. The Scottish Government plans to undertake a review during the course of 2014-15 and will consult the Islands Councils on any proposed legislative or other changes. The review will include consideration of grant rates.
The Scottish Government recognises the benefits of crofting and agriculture to the islands, and will continue to work closely in partnership with Islands Councils and communities.
Scotland's public services and public service employment can bring economic benefits to Scotland's islands as well as bringing services closer to the people they work with. The Scottish Government will consider when expanding the functions of organisations such as the Crofting Commission which have a close working relationship with the islands whether there is benefit in locating additional staff and resources on the islands alongside existing public sector bodies.