Crown Estate (Wales) Bill [HL]
Tuesday 10th September 2024
(5 months, 1 week ago)
Lords ChamberCrown Estate (Wales) Bill [HL] 2024-26 Read Hansard Text
Crown Estate (Wales) Bill [HL]
Friday 7th February 2025
(2 weeks, 1 day ago)
Lords ChamberCrown Estate (Wales) Bill [HL] 2024-26 Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Wigley (PC)
My Lords, I was first drawn into politics in Wales by the action of Liverpool Corporation in the late 1950s, when it purloined the Tryweryn valley in Meirionnydd, turfed out the farmers and villagers and, despite huge local and national opposition, built a reservoir, selling water at a profit to Merseyside industrial customers. That event triggered Plaid Cymru’s parliamentary breakthrough in 1966, which itself led to the SNP’s breakthrough in 1967. Britain’s 50 years of devolutionary politics grew out of the drowning of Tryweryn.
Wales has a history of exploitation of our natural resources, whether it is coal or other minerals, or our water resources, on which Birmingham and London now increasingly depend, as we heard even this morning. We likewise see the exploitation of our energy potential—wave, sea currents, estuarial waters and wind on shore and in the seas around our coast. My Plaid Cymru colleagues and I want to see the maximum possible benefit from such projects coming into the Welsh economy; we want to see that happen in a planned manner that recognises the financial benefit that should rightly come to those who invest in such projects, but also to the communities in which they are based. We want to see such potential developed in co-operation with the Welsh Government, local authorities and industrial development agencies. That means working in partnership and avoiding the totally unacceptable and unnecessary tensions and bitterness generated by the Tryweryn issue.
The Bill for which I request a Second Reading today deals with the democratic control of Wales’s natural resources. The Crown Estate assets in Wales include two-thirds of the Welsh foreshore and tidal river beds. It has control over certain ports, including the strategically important Milford Haven; it has rights over tidal streams, such as Ramsey Sound and Swnt Enlli; and it has control of over 50,000 acres of land in Wales. It is a major operator within the Welsh economy and will get even larger with the exploitation of clean energy potential off our coast.
The Bill enables the Treasury to make a scheme transferring all the existing Welsh functions of the Crown Estate commissioners to Welsh Ministers in Senedd Cymru. The Bill is an enabling one, giving the Treasury a mechanism for such a transfer. It gives it an agenda on which to work, and it is our hope that it will pursue it.
The Bill draws on the steps taken by the Conservative Government in transferring to the Scottish Parliament control over the Crown Estate in Scotland via the Scotland Act 2016 and the 2017 Crown Estate statutory transfer scheme. The powers so transferred were over property, rights and interests in land in Scotland and rights relating to the Scottish renewable energy zone. The devolved Crown Estate benefited the Scottish Government by £113 million in 2023-24. The Crown Estate is not devolved to Wales, and Senedd Cymru gets no such benefit.
The Crown Estate Bill is now progressing through the Commons. I remind the House of the words of the noble Lord, Lord Hain, during the passage of that Bill:
“Welsh Labour’s programme for government in the Senedd includes a commitment to pursue the devolution of powers needed to help reach net zero, including management of the Crown Estate in Wales”.—[Official Report, 14/10/24; col. 16.]
The noble Lord subsequently tabled an amendment providing for the appointment of a commissioner responsible for giving the Crown Commissioners advice about Wales. Supporting that move, the noble Lord, Lord Murphy, who I am glad to see in his place today, said that he had a “great deal of sympathy” with the points made in relation to devolving the Crown Estate to Wales.
There have been voices from all four mainstream political parties in Senedd Cymru and the county councils, expressing anger at the way in which the Crown Estate is treating Wales. Gwynedd Council is asked to pay the Crown Estate £160,000 annually, merely to secure access to our own shoreline. Senedd Members voted by 35 votes to 13 in support of a motion to devolve Crown Estate responsibility to Senedd Cymru. Just two weeks ago, Finance Minister Mark Drakeford stated, on the record:
“I think that the Crown Estate should be devolved to Wales, as it is to Scotland, and that would give us a better opportunity in Wales to take advantage of our natural resources”.
The advice that the proposed commissioner will give the Crown Estate will no doubt reflect the opinion of Welsh Government Ministers on the way in which Crown Estate profits arising from its activities in Wales should be used. Profits of the Crown Estate have grown substantially over recent years. Its revenue profit obtained from Wales is estimated to have increased from £9 million per annum in 2021 to £35 million per annum in 2024.
We have to estimate those figures, because the Crown Estate, incredibly, stopped publishing profit figures for Wales in 2021. Plaid MPs have been given the lame excuse that
“it is not possible to disaggregate net revenue profit attributable to Wales”.
If it was possible to disaggregate the figures up to 2021, why not now? So we are left in the position where the proposed commissioner will not be told about the profits made by the Crown Estate in Wales—or will he? Or she, indeed?
It is little wonder that Wales’s Finance Minister, Mark Drakeford, reiterated last week his call for control of the Crown Estate to be devolved to Wales. Mr Drakeford and the First Minister, the noble Baroness, Lady Morgan of Ely, have long called for the Crown Estate to be devolved to Wales, but UK Ministers apparently will not listen.
In an Answer to a Question by Llinos Medi, MP for Ynys Môn, the Treasury Minister, Darren Jones MP, stated:
“The UK Government has had no discussions with the Welsh Government on devolving the Crown Estate”.
It is unacceptable that policy decisions impacting on Wales are made by UK Labour Ministers without discussing them with Welsh Government colleagues.
On Report of the Crown Estate Bill, an amendment proposed by the noble Baroness, Lady Humphreys, would have required the Treasury to transfer responsibility for the management of the Crown Estate in Wales to the Welsh Government. That amendment was supported by Labour, Conservative and Cross-Bench colleagues from Wales as well as Liberal Democrat and Plaid Cymru Peers. It was defeated by 147 votes to 74.
I will briefly outline the content of this Bill, which is a straightforward two-clause, four-page document. Clause 1 provides that there be inserted into the Wales Act 2017, after Section 52, new Section 52A authorising the Treasury to make a scheme transferring all the existing Welsh functions of the Crown Estate to Welsh Ministers or a person nominated by Welsh Ministers. The scheme must provide for the transfer of designated rights and liabilities of the commissioners in connection with the functions transferred. The scheme must include provision to include that any person in Crown employment is not adversely affected by the transfer. The scheme must also safeguard the interests of defence and security and matters relating to telecommunications. It must not conflict with the interest of reserved matters or with the transmission or distribution of electricity. Such a scheme may be made only with the agreement of Welsh Ministers and no statutory instrument can be made unless a draft instrument is approved by Senedd Cymru. Clause 2 deals only with the extent, commencement and Short Title.
I thank the Public Bill Office for its help in drawing up this Bill, but emphasise that any shortcomings in the Bill are mine and mine alone. Such weaknesses can be addressed in Committee if colleagues are so minded. The Bill may then perhaps progress to give Welsh MPs a chance to stand up for their colleagues in Cardiff and enable the Bill to reach the statute book. I beg to move that this Bill be read a second time.
Lord Murphy of Torfaen (Lab)
My Lords, it is a great pleasure, as always, to follow the noble Lord, Lord Wigley. I was trying to work out how long we have been in Parliament together—it is 38 years since we first spoke on Welsh matters in the House of Commons. On and off, we have agreed probably more times than we have disagreed. It is, as I say, a great pleasure to follow him.
We have of course dealt with this issue some months ago, when the Crown Estate Bill came through this House; it is now in the other place. I think, however, that the argument and discussion are still live. There is some dispute as to the amount of money—or disagreement: perhaps “dispute” is wrong. Is it £8 million, as the Library tells us, or is it much more, £30-odd million, as the noble Lord said? Whatever it is, it is significant in terms of the Welsh budget. One question that I would grateful if my noble friend the Minister could answer in his wind-up is whether the equivalent money in Scotland is regarded as properly additional to the block grant and whether it would be in Wales, if this were devolved to Wales. That is a hugely important issue. I remember spending a year back in 1999, with regard to the European Union Objective 1 money, arguing, discussing and eventually agreeing with Gordon Brown about the way in which European money should be genuinely additional. Quite possibly, he did not agree with his officials at the Treasury—not a bad precedent, from time to time, if I might say so.
Another issue that I want to touch on is that this is of some constitutional importance. My own position with regard to devolution has changed dramatically since 1978 when I was treasurer of the Labour No Assembly campaign. When eventually, many years later, I became Welsh Secretary, my views on devolution gradually changed, so that I ended up supporting the referendum on extra powers for the Welsh Assembly some years ago. That is because the nature of devolution, and the institutions of devolution, are now firmly embodied in the Welsh psyche. There is no question that it is very much part of our political landscape. People understand what it does. If this issue is devolved to Scotland, I still cannot understand why it cannot be devolved to Wales. That is the big question in front of us. I know that the Minister will say that it is settled now and that we have to live with what we have to live with, but I think the constitutional precedent that was set with Scotland getting it causes difficulty.
The compromise that we reached in having a Welsh commissioner for the Crown Estate was a good one. Welsh interests will be partly safeguarded by that, and I hope that we will soon have some progress on who will occupy that position. It was nevertheless a compromise. My fear on this and other issues is that we are not really talking enough to the Welsh Government. Again, I will ask my noble friend the Minister to comment on the view that there have been no discussions with my colleagues in the Welsh Government and Senedd on this matter; I think that is highly unlikely, and I hope that they have indeed been talking on this issue. There is a wider view on this. it was argued at the general election that, if we have a Labour Government in Westminster and a Labour Government in Cardiff, it would—as it did many years ago—make relations much easier. That might not always be the case, which is why the previous Government, rightly in my view, set up the machinery for consultation, discussion and dispute resolution between the devolved Administrations and the United Kingdom Government.
The Minister will, I hope, confirm one way or the other whether there have been discussions, but this issue has not gone away. It will be there for some time to come in relation to the way in which the Government in Westminster deal with the Government in Cardiff. I support the noble Lord, Lord Wigley, in the sense that this is an issue that needs eventually to be discussed and resolved, although perhaps not in the way it is at the moment. We are where we are, though. I very much look forward to the response by my noble friend the Minister, for whom I have the highest regard.
Lord Moynihan (Con)
My Lords, I too congratulate the noble Lord, Lord Wigley, on introducing this Bill and for the many decades that he has eloquently, and with no less a degree of commitment, sought to represent the people of Wales and serve their best interests. It is also a great pleasure to follow the noble Lord, Lord Murphy. I know this as someone who was educated in Wales and was, for the past three years, chair of Haberdashers’ Monmouth School and a long-standing president of Welsh Rowing.
I should also declare my interest in Wales as set out in the register. I chair Amey, which has worked hard to ensure the successful electrification of the Core Valley Lines radiating out of Cardiff. I also chair Acteon, which is a subsea service company that has an active global interest in offshore wind, providing seabed-to-surface sustainable energy solutions for offshore wind.
My view is that, to maximise economic growth in Wales and generate employment in sustainable energy technologies, now would not be the best time to pursue this Bill. I emphasise “at this time”, because I would favour the Government entering into discussions with Wales in due course. I hope they will make it clear that any discussions on devolving the Crown Estate to Wales must not conflict with their priority in the five-year plan to increase the proportion of the UK’s energy generated from renewables to decarbonise the UK’s electricity system by 2030.
Investors look for stability. Growth is generated and new jobs are created only if there are two foundations in place: a stable policy framework and strong financial support with backing from government. The establishment of Great British Energy is under way and understood by investors. The publicly owned clean power company will work with the private sector to encourage greater investment in renewable energy, including offshore wind, which is so important to Wales. Similarly, the Crown Estate Bill underlines the Government’s commitment to support the development of offshore wind projects in seabed areas held by the Crown Estate. Time is of the essence to meet these targets and we need to increase grid capacity now to achieve the rapid expansion of offshore wind energy.
One major hurdle to these ambitious goals would be a minimum of three years of uncertainty; this would happen if we passed the Bill in this Session, for that is how long it took in Scotland. As we know, the process for Scotland was very complex and destabilising for investors. There were significant hurdles to overcome and they all took time: the legal and constitutional challenges; clarifying which functions could be devolved; and ensuring compliance with existing laws, which proved intricate. Assessing how revenues from Crown Estate assets would be managed and distributed in Scotland took a long time. Determining the value of Crown Estate assets and how they would be managed after the transfer was a significant challenge. Engaging with all the stakeholders, including local communities, businesses and environmental groups, was crucial and challenging, as differing interests had to be balanced in the management of assets. The Scottish Government then had to build the capacity to manage the new functions effectively, which involved training new staff and developing new management frameworks. Finally, but self-evident from the debate, the transfer was politically sensitive, with differing views among the political parties on how Crown Estate functions should be managed and by whom. All of that added to the time involved and the complexity of the process.
Further, there is a significant difference in this Bill. It is the wish of the noble Lord, Lord Wigley, that the legislation be subject to scrutiny by both Houses of Parliament and the Senedd. This additional level of approval will take yet more time, and the Delegated Powers Committee brought to our attention in its report that it did not consider scrutiny of the power by the Senedd appropriate.
It is not that I do not favour entering into discussions in due course, but it should not be at a time when it is so important to encourage investors to come into Wales. All this means that there would be less clarity for those investors today. More troublingly, even if the noble Lord, Lord Wigley, put into the Act that it would come into effect three years after it passed, there would be investor uncertainty, which would be damaging. These years of uncertainty would be an inevitable consequence of a move to devolve the Welsh Crown Estate and would need to be factored into investors’ assessments. I fear that they would steer investors away from Welsh waters to other parts of the UK, to the detriment of research and development jobs in Wales, employment opportunities in Wales, which I passionately believe in, and the Welsh ecosystem of business associated with developing wind farms offshore, particularly now when there is so much attention on offshore floating wind opportunities, on which decisions are to be made over the next three years.
I am not arguing that the policy, long advocated by the noble Lord, Lord Wigley, and echoed today by the noble Lord, Lord Murphy, should not be considered in future. It should be, but not at this critical time for the net-zero policy of this Government. I fully understand the political will to devolve the Crown Estate to Wales, but the arguments are currently outweighed by the potential risks to the UK energy market and investor confidence in Wales. Let us grasp the very real opportunities together and work for the success of Wales in the offshore wind energy market. I have never been more optimistic about the potential for Wales. Sadly, if it is introduced now, I see this Bill only damaging that prospect. Its time will come, but not now.
Lord Anderson of Swansea (Lab)
My Lords, there must be some book which gives 1,001 reasons for disagreeing with a particular proposal. The noble Lord, Lord Moynihan, must have read it and reproduced much of its powerful message: “Yes, it is important, but now is not the time”. No doubt, there are many other reasons and excuses as well.
I believe that now is the time. I follow my noble friend Lord Murphy and, dare I say it, my noble friend Lord Wigley, whom I have always considered a friend and a major contributor to debates in this House on a range of issues, not just devolution. I have long been an admirer of his. It is possible that this may be one of his valedictory speeches and I commend him for all he has done in his time here. He and I go back a long way. I think it was about 1966 or 1967 when he first came with a group of colleagues from Plaid Cymru to talk to me about Europe. We have been in touch ever since and I have long admired his contribution.
I will be very brief, because I adopt wholeheartedly what my noble friend Lord Murphy has said. Like him, I have made a progression. In the late 1970s, I was one of the so-called gang of six Labour MPs who opposed devolution. I thought that it had not been thought through adequately and used arguments such as “slippery slope” and so on. Some of them may still be partially true, but it was mainly the policies of Mrs Thatcher, ignoring Welsh interests in the 1980s, that largely convinced me. She was a recruiting sergeant for many of those who changed their views over the 1980s. In 1997, I went around Wales giving a different message from that which I had given in the 1970s. As my noble friend Lord Murphy said, the Senedd is now firmly established in Wales. There will be debates about powers and so on but there is no going back. Although there have been teething problems, it is now accepted and there is much power behind it.
I see no reason in principle why we should not follow the precedent of Scotland, though the problems around timing and adjustment were put forward powerfully by the noble Lord, Lord Moynihan. I commend my noble friend Lord Wigley for his initiative on this and wholeheartedly support him.
Lord Thomas of Cwmgiedd (CB)
My Lords, I too support the noble Lord, Lord Wigley, in his introduction to this Bill and warmly thank him for bringing it again before the House.
As the noble Lord, Lord Murphy, said, the real place to start is the constitutional issue. As forcefully pointed out in our last debate on this, this does not, as it presently stands, deal with a union matter. We are dealing with a matter capable of devolution because power over the estate has been devolved to Scotland. One can see immediately from the Scottish Crown Estate’s report one of the benefits of that: it shows the revenue, as the noble Lord, Lord Wigley, referred to, with a breakdown showing how each community benefits. I will ask the Treasury to think about this hearts and minds issue in a moment.
The real issue is trying to marry what the Minister and the noble Lord, Lord Moynihan, said about the short term and the long term. What is lacking, in my view, is transparency, accountability and a long-term strategy, and distinguishing all that from the technical business of managing the offshore wind industry. They are separate problems; if we disentangled them, we might be able to make some progress.
That progress can be made only by recalling the history of Wales, however the Crown Estate came to the Crown: partly by conquest—it is important to emphasise that word in the history of the United Kingdom—partly by inheritance or partly by an Act of Parliament. Maybe that does not matter, but what does matter from the history of Wales is the perception of the Welsh people. Their natural resources have been exploited, first in coal and the heritage with which we live, and then with water. The Welsh people are not prepared to allow this to happen again. How do we solve this problem?
I am delighted that, as the Minister told us on the last occasion during the passage of the Bill on the Crown Estate proper, the Government are going to discuss issues with the Welsh Government. I very much hope that the Minister can help us with those discussions.
Secondly, I hope that, as soon as the Bill is passed, there will be Welsh commissioner. One must remember, however, that his function is limited to giving advice on the functions in relation to land. What is wrong is that, first, there is no transparency of the position; secondly, there is no showing how the assets are used to the benefit of Wales; and, thirdly, there is no long-term strategy.
The Minister told us two things of great importance on 14 October. He said:
“As the Crown Estate’s operations are not divided into business units for each nation, agreeing the exact net profit figure attributable to Wales is not straightforward, because most of the associated costs cannot easily be disentangled from the Crown Estate’s overall costs and would, in places, require subjective judgment”.
Secondly, he said that,
“if Wales were to benefit only from the income generated in Wales, then it would likely be zero or negligible for several decades to come. Welsh assets are relatively new and will take time to mature, likely in the order of 10 to 15 years”.—[Official Report, 14/10/24; cols. 29-30.]
Both of those things are used as a justification for making no progress.
One looks to the Crown Estate’s annual report. Although these reports are not a joyous read, there is an awful lot of information contained in them. Unlike the position in relation to Scotland, a document called Wales Highlights contains absolutely no financial information of what income is generated. There is nothing of the kind. If one goes back to Wales Highlights for the year ending 31 March 2020, it showed a gross surplus income of £8.4 million on property valued at £96.8 million. I think that most businessmen would not think that this was a bad return for whatever came. Whether that falls into the category of a negligible income, I do not know, but no doubt it would help stop the leaks in the museums of Wales.
The following year shows a similar income, but it also shows the revaluation of the Crown Estate in Wales from £96.8 million to £603 million. Importantly, this appears to result from the offshore wind leasing round four. At the time of the full report for the whole Crown Estate, the revenue—it is broken down in some senses, most importantly for marine—was only £120.8 million. The highlighting stopped, and I simply do not understand why, after that review in Wales, there is no breakdown. I very much hope that the Minister will explain why what was practical in 2021, when round four had taken place and we were able to value the leases in Wales, has stopped. There should be full transparency and accountability.
What is important is to look at how the profits of the Crown Commissioner rose. By the year ending March 2022, the operating profit from marine had risen modestly to £127.5 million. However, by the year ending 2024, it had risen to £1.19 billion. If one looks at the notes to the account, the part of it attributed to the consolidated fund is a huge amount of money, but where did the increase come from? It is clear from page 50 of the annual report that it is attributable to option fees on round four, which produced £1 billion. What I do not understand is why we cannot know what is attributable to Wales. It is critical that there be proper accountability.
I come to my point, which is this: we need to work together to allow what the Minister and the noble Lord, Lord Moynihan—and, I am sure, the people of Wales—rightly want, which is good management of the assets, but we need accountability and transparency. As the Crown Estate Commissioner will not tell the people of Wales what the benefits are, they must be compelled to do so by an Act of Parliament.
I very much hope that this Bill will move to Committee, as time does not permit me to develop these details of accounting any further. I should not have to do this, but what is absolutely clear is that the current step forward is not enough. This Government, in particular HM Treasury, must bear in mind that, in about 15 months’ time, the people of Wales will be able to make a judgment. I hope that, by that stage, the historic legacy of the way in which Wales has been deprived of the benefits from its natural resources will be shown. At the moment, there is money coming to Wales from its resources, and there is a good prospect for the future.
Lord Anderson of Swansea (Lab)
I apologise to the House for speaking prematurely; I should have spoken in the gap. I apologise for that. My only mitigation is that, as a good Welshman, I was led by the spirit.
Baroness Smith of Llanfaes (PC)
My Lords, I rise to speak in unequivocal support of this Private Member’s Bill, introduced by my noble friend Lord Wigley. It is a pleasure to follow the contribution from the noble and learned Lord, Lord Thomas of Cwmgiedd.
The case for devolving powers over the Crown Estate to Wales is not only strong but timely and just. This is not just a question of where decisions should be made; it is about fairness and ending the continued wealth extraction from Wales. The value of Crown Estate assets in Wales has soared in recent years. A financial report for the year 2006-07 indicated that the Crown Estate’s assets in Wales were valued at £21.1 million, generating net revenue of £2.5 million. In the financial year 2023-24, the Crown Estate announced a profit of £1.1 billion—an increase of £658 million on the previous year. As can be seen, and as a number of noble Lords have discussed, there are gaps in these figures. Why?
Given these figures and the number of projects both currently in development and projected to be operational in the years to come, it is entirely conceivable that the asset value of the Crown Estate’s holdings in Wales will exceed several billion pounds, reflecting hundreds of millions in annual revenue. At present, the revenue derived from the Crown Estate’s activities in Wales is paid directly to His Majesty’s Government, with
“no guarantee that Wales receives an equivalent amount back”.
The National Infrastructure Commission for Wales asserts that the
“current system sees a transfer of wealth from fees arising from the Crown Estate’s commercial activity in Wales, to England, an illogical and bizarre outcome”.
Plaid Cymru believes that arrangements should be made to devolve the functions of the Crown Estate to a new body accountable to the Welsh Government and with the sole duty of improving the well-being of the people of Wales. All commercial activity arising from the Crown Estate in Wales would be invested for the benefit of the people of Wales.
There is popular support for this move. The last major poll on devolution of the Crown Estate to Wales showed that 58% of people supported it. Half of all councils in Wales have passed motions calling for this devolution—including Conwy, Gwynedd, Denbighshire, Flintshire, Powys, Monmouthshire, Ceredigion, Carmarthenshire, Swansea, Neath Port Talbot and Caerphilly—with others with motions ready to be debated in the coming weeks. These councils represent a broad political spectrum, too, including Labour in Swansea Council, the Liberal Democrats, the Greens in Powys, and Plaid Cymru.
Through a number of responses to FOIs, we now know that councils in Wales paid over £345,000 in 2023 in lease fees to the Crown Estate. This is simply to lease the land which is in their area, often public footpaths. A devolved Welsh Crown Estate is an opportunity to address this unfairness, so that councils’ public money is not handed over to the Treasury and on to the sovereign grant but directed back into communities for their benefit.
In light of this, I suggest that the Crown Estate urgently reviews these lease fees and either reduces them or abolishes them entirely. Over £300,000 may seem trivial when profits are at £1.1 billion, but for our councils it is a significant amount, particularly as they face making tough decisions to cut local services.
Looking ahead to a new entity post devolution, Plaid Cymru has proposed targeting money generated from a devolved Crown Estate at deprived communities in rural Wales and our deindustrialised valleys. I look forward to visiting the Crown Estate Scotland soon through the Industry and Parliament Trust, to learn from its similar model that targets communities in the Highlands. On a national level, there is an opportunity to use the money to develop a Wales sovereign wealth fund, modelling those of other countries, such as Norway.
I commend my noble friend for crafting a proposal in the Bill that offers flexibility. While I strongly believe that future frameworks for the devolved Crown Estate could include targeted initiatives such as those that I have outlined, the Bill wisely leaves room for adjustment and negotiation between the Welsh and UK Governments. As the Bill’s broad framework acknowledges, this process cannot happen overnight, but it sets a clear path forward. It allows both the Treasury and the Welsh Government to engage in meaningful dialogue and progress the transition in a structured manner.
If, as Ron Davies said:
“Devolution is a process … not an event and neither is it a journey with a fixed end-point”,
then we must remain true to this principle both in word and in deed. Wales must not be relegated to a subordinate position to Westminster; both Governments should be equal partners in that relationship.
I ask noble Lords to consider whether they believe that Wales should be treated fairly and whether Wales should be granted the same powers enjoyed by other nations—in this case, Scotland. The Bill before us is about delivering that fairness and equality. Surely it is not radical to say that every nation deserves the right to benefit from the wealth generated by its own natural resources.
I hope that His Majesty’s Government carefully consider this opportunity before them and support the safe passage of the Bill.
Baroness Bennett of Manor Castle (GP)
My Lords, I am delighted to follow the noble Baroness, Lady Smith of Llanfaes, and congratulate the noble Lord, Lord Wigley, on bringing before us this important and timely Bill. We have a sense of unfinished business here. It is not too late, as we have heard, for the Government to pick this up with their own Crown Estate Bill, and we saw the possibility of that happening demonstrated earlier today in your Lordships’ House.
It is worth noting the point made by the noble and learned Lord, Lord Thomas of Cwmgiedd, that we are talking here about land resources that are the result of conquest. It is interesting that in the current global position, it is a Green principle to believe in self-determination and democracy. I know that the Wales Green Party has been campaigning very strongly in favour of the step that the Bill delivers, and I am sure I will be talking about it with its members when I visit Cardiff next weekend.
I hope that everyone will agree that if we want to discuss British values, self-determination and the right for people to democratically decide their own governance and to have control over their own resources are indeed British values. The Bill is timely because currently these are issues of great concern to the people of Greenland and Panama, as they are to the people of Wales. If we believe in the increasingly battered principle of an international rules-based order and if we are to stand up against powerful forces opposed to that, working at speed to smash them both in their home countries and abroad, this Bill takes us in the right direction.
It is also worth looking at the context of much that is discussed in your Lordships’ House, such as the recent Channel 4 report on Generation Z, identified as those aged 13 to 27. The headline said that a majority of young people want the country to be a dictatorship. When you actually look into the detail of the questions that were asked, it is a little more complex than that. They were asked whether they favoured a strong leader
“who does not have to bother with Parliament and elections”.
I note that these young people are perhaps reflecting what we are hearing from the Government and the governing classes, given that we have just seen the abolition of a large number of elections being delivered by the Government and a great deal of talk about elected mayors being strong leaders. So we might want to look at where these ideas are coming from.
Before we give up on democracy, we should think about trying it. This Bill delivers democracy for the people of Wales. Democracy is not just about voting; it is about deliberating, being in control, being able to collectively make decisions and the people most affected being able to make them, and benefiting from their own resources. As has been commented on by multiple noble Lords, I believe it is the policy of the Labour Party in Wales to support the Bill.
It is worth noting the very relevant context. Report stage of the Great British Energy Bill will be with your Lordships’ House next week and I understand that the Government have finally made a concession on supporting community energy, something that your Lordships’ House has fought for and backed again and again. I reserve the right for final judgment until I have seen the detail; none the less, this is a positive sign. The Bill of the noble Lord, Lord Wigley, would enable much more community control and community energy to be delivered in Wales rather than by giant multinational companies operating with far distant commissioners.
Finally, if this Bill was delivered, it would really highlight the remaining lack of democracy around the whole Crown Estate structure for England.
The noble Lord, Lord Moynihan, said that the Bill might delay. I suggest that it would greatly enhance and speed up the possibility of delivering that community and democratic energy. There is the strongest possible Green support for this and I very much hope that the noble Lord, Lord Wigley, is able to hear from the Minister that this is all going to power ahead.
Baroness Humphreys (LD)
My Lords, I thank the noble Lord, Lord Wigley, for securing this Private Member’s Bill, and also for the vast amount of work which has gone into its production and the clarity with which he has explained the intent of the Bill.
The Bill comprehensively covers all the steps necessary to transfer responsibility for the Crown Estate to the Welsh Government. It gives details of a transfer scheme, together with details of post-transfer management, the transfer of rights and liabilities, and the safeguards and conditions the Treasury considers “necessary or expedient”. Crucially, the Bill would amend the Civil List Act 1952 to ensure that all revenue generated from the Welsh Crown Estate assets would be paid into the Welsh Consolidated Fund.
I make no apology for speaking in favour of the Bill, despite a disappointing response to amendments during the progress of the Crown Estate Bill through this House. When I spoke to my Amendment 26, calling for the devolution of the Crown Estate’s powers to Wales, in Committee on the Crown Estate Bill, I explained that I deliberately did not include a timeframe for the transfer of powers to the Welsh Government. I felt then that this will be potentially a long battle—but it is one we are happy to engage with and to continue.
I quoted from the report of the National Infrastructure Commission for Wales, which asserts:
“By 2030, The Crown Estate’s functions in Wales should be completely devolved to a new body that has as its principal aim the reinvestment of all funds in Wales for the long-term benefits of the people of Wales”.
I said that “by 2030” is a timeframe I am more comfortable with. However, the danger is that, by then, most of the wealth might have been extracted from the Welsh Crown Estate.
Why are some of us so keen on the devolution of these powers? In Wales, the Crown Estate is expected to generate at least £1 billion from offshore wind energy leases in our waters in the coming years. Keeping this money in Wales could add an estimated £50 million per year to the Welsh Government’s budget—money that could directly benefit our public services and communities. Devolving the powers of the Crown Estate to the Welsh Government and the Welsh Parliament would bring us into line with Scotland, recognising Wales’s place as an equal nation, and would bring substantial benefits to Wales. The current system sees profits flow to the UK Government, with Wales missing out on vital funds, especially given successive UK Governments’ historic underfunding of Wales, particularly in infrastructure.
I was pleased to see that, yesterday, in the other place, my party announced during the Commons debate on the Crown Estate Bill that it would work with Plaid Cymru to push for the devolution of the Crown Estate. The Lib Dems submitted their own amendment but committed to supporting Plaid’s amendment if it were selected to proceed to the next parliamentary stage.
As the noble Lord, Lord Wigley, referred to, the devolution of the Crown Estate has widespread support in Wales from the Liberal Democrats and Plaid Cymru and a majority of local authorities. As the noble Baroness, Lady Smith of Llanfaes, said, my own council in Conwy County recently voted in favour of a Plaid Cymru motion, and in November Carmarthenshire councillors voted unanimously in favour of the devolution of these powers. I suspect that even the Welsh Labour Government have been a supporter—but we do not know; there has been very little consultation with them, so their voice is very rarely heard. Opinion polling in Wales continues to show that a clear majority of Welsh people want to see the estate devolved.
Noble Lords across the House have made strong cases for the objects of this Bill. I will now turn my attention to the Government’s position and to one of the reasons the Minister gave in dismissing our amendments during the debates on the Crown Estate Bill in this House last year—perhaps he will give it again today. His main reason was that it would
“delay UK-wide grid connectivity reform”.—[Official Report, 5/11/24; col. 1442.]
We can safely say that we know all about delays to grid connectivity in Wales; it has been the focus of the attention of the Welsh Affairs Committee in the other place for a number of years. Its 2021-22 report concluded that
“developers of renewable energy were encountering problems with grid capacity and connecting to the electricity grid in Wales”.
The committee also said:
“We recognise the strengths of an electricity grid that serves the whole of Great Britain but consider that there are distinct challenges and opportunities relating to grid infrastructure in Wales that require specific focus from the UK Government”.
The report contains many references to the UK Government’s responsibility in this area. The then Conservative Government, in their 2023 response to the report, admitted that a “step change” was needed to boost capacity in Wales. Can the Minister say what assessment he has made of the steps, if any, taken by the previous Government to initiate this step change? What further steps have his Government taken since taking office?
I am sure that your Lordships understand that the reference to delaying UK-wide grid connectivity reform as a reason for not devolving the Crown Estate to Wales is rather ironic and particularly galling for those who have been calling for UK investment in this area of infrastructure in Wales for many years. We on these Benches are in full support of the Bill of the noble Lord, Lord Wigley, and we wish it every success.
Baroness Bloomfield of Hinton Waldrist (Con)
Hoffwn ddiolch i Arglwydd Wigley am ddod a’r Bil Aelod Preifat hwn i’r Tŷ ar gyfer y ddadl heddiw. I congratulate the noble Lord, Lord Wigley, on his Crown Estate (Wales) Bill and thank him for bringing it to the House for debate.
We on these Benches have thought long and hard about the Bill, and my noble friend Lady Vere of Norbiton debated these issues with the noble Lord in Committee on the Crown Estate Bill, which is making its way through the other place presently. I understand the arguments made by several noble Lords and I appreciate the strength of feeling, as well as the clear differences between Scotland and Wales when it comes to the Crown Estate. We support devolution and agree that local people make better decisions for their area. However, I am afraid that we have some important concerns about the Bill, given the current context of policy-making for the Crown Estate.
The Crown Estate in Wales is extensive, covering significant areas of foreshore, seabed and land, and its value has grown considerably, particularly with the rise of offshore renewable energy projects. I agree that, in time, we need to create a climate of co-operation to maximise the benefit that we can all gain from developing our national resources. The legacy of Tryweryn, which was mentioned by the noble Lord, Lord Wigley, still looms large; no one wishes to create another source of resentment.
While the present level of resources that could accrue to the Welsh Government is relatively small, it may well, and probably will, grow in time, particularly as the offshore floating wind industry takes off in south-west Wales. The noble Lord, Lord Wigley, was right to call for greater transparency in the Crown Estate accounts; a point further underlined by the noble and learned Lord, Lord Thomas of Cwmgiedd, who gamely tried to navigate through the fog of those accounts.
When this was discussed last year, the House was considering a sea-change in the Crown Estate’s future. When that Bill passes, Parliament will have set the Crown Estate on a new path, playing an important role in the development of offshore wind. Given that context, we do not feel that devolving the Crown Estate in Wales is the right step at this time. Instituting a whole new system of governance for this part of the Crown Estate would open questions about the future of the Crown Estate, and we feel that that reassessment of the future of the estate could be a setback in the ambitions we are setting for it with the Government’s Bill. For that reason, I am afraid that we cannot support this Bill today.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, is a pleasure to speak in this debate today. I congratulate the noble Lord, Lord Wigley, on this Bill and on his opening speech. While we may disagree on the substance of this issue, I enjoyed our debates on this topic during the passage of the Crown Estate Bill, and it was a pleasure to hear him put the case so powerfully again today.
I will begin by setting out how the Crown Estate currently operates and the case for retaining the current model, which the Government believe provides the best deal for Wales and for the wider United Kingdom. As noble Lords will be aware, the Crown Estate was established with the aim of creating lasting and shared prosperity for the whole of the United Kingdom. Governed by the Crown Estate Act 1961, it holds a diverse portfolio of buildings, shoreline, seabed, forestry, agriculture and common land. It has shown itself to be a trusted and successful independent commercial business, with a proven track record of effective manage-ment. Each year, the Crown Estate is required to pay its profits into the UK Consolidated Fund, which has totalled more than £4 billion over the past decade. This money is used to fund vital public services across the UK, including in Wales in reserved areas. When the UK Consolidated Fund is spent in England—in areas which are devolved to Wales—the Welsh Government also receive funding through the operation of the Barnett formula.
The proposed powers in the Crown Estate Bill, which is currently progressing through the other place, combined with the Crown Estate’s existing scale, expertise and track record, mean that it is uniquely placed to drive forward important growth-generating projects in Wales. This is particularly true in relation to offshore renewable energy and other emerging offshore technologies.
Over the last 20 years, the Crown Estate has helped to deliver a number of important renewable energy projects and to position Wales at the vanguard of clean energy technology and growth. The benefits of these projects are being felt in communities and supply chains right across Wales. For example, the Crown Estate has invested £1.2 million in Welsh tidal stream energy through the Morlais demonstration zone in Anglesey. Last year, the Crown Estate launched offshore wind leasing round 5 for floating offshore wind in the Celtic Sea, which is expected to deliver significant jobs and supply chain benefits locally. The Crown Estate works closely with the Welsh Government and Natural Resources Wales to develop these projects and ensure that resources are sustainably managed for the long term.
As noble Lords will remember, the Government were pleased to support the successful amendment of the noble Lord, Lord Hain, moved by my noble friend Lord Murphy, to the Crown Estate Bill, which will see the appointment of two Crown Estate board commissioners for Wales and Northern Ireland respectively. This is a positive step that will ensure the Crown Estate’s board continues to work in the best interests of the whole of the UK. Importantly, the devolved Governments will reserve the right to be consulted over these appointments. I am grateful to all noble Lords across the House, including some who have spoken in today’s debate, for their work to make this change possible.
Let me turn to the concerns the Government have with the Bill we are discussing today. Devolving the Crown Estate to Wales at this time risks significant fragmentation of the energy market and jeopardising the existing pipeline of offshore wind development in the Celtic Sea planned into the 2030s. This in turn would undermine international investor confidence and significantly delay progress towards net zero, to the detriment of the whole of the UK.
Devolution would likely require the creation of a new entity to take on the management of the Crown Estate in Wales. This entity would not benefit from the Crown Estate’s substantial capability and capital and systems abilities, nor from the fact that the Crown Estate’s marine investments are currently made on a portfolio-wide basis across England and Wales. Devolving the Crown Estate to Wales at this time would disrupt these existing investments, as they would need to be restructured to accommodate a Welsh-specific entity.
As the noble Baroness, Lady Humphreys, quoted from our debates on the Crown Estate Bill, devolution would likely delay UK-wide grid connectivity reform, which is crucial for meeting our growth targets, because it would make it harder to co-ordinate energy generation and infrastructure across England and Wales. The Government are driving forward grid connectivity reform. Introducing a new entity, which would have control of assets only within Wales, into this complex operating environment, where partnerships have already been formed, would not make commercial sense. A devolved entity would be starting from scratch, midway through a multimillion-pound commercial tendering process for a pipeline of Welsh projects, at a time when the Crown Estate is undertaking critical investment in the UK’s path towards net zero.
Some noble Lords have argued today that Wales would benefit financially from devolution of the Crown Estate. Let me set out why the Government believe this not to be the case. As I have already noted, Wales benefits from the UK Government’s spending derived from the Crown Estate. It receives Barnett funding when Crown Estate funding is spent in England in areas which are devolved in Wales. As the noble and learned Lord, Lord Thomas, quoted from our debates on the recent Crown Estate Bill, if Wales were to benefit only from the income from the Crown Estate generated in Wales, it would likely be zero or negligible for several decades to come. This is because Welsh assets are relatively new and will take time to mature, likely to be in the order of 10 to 15 years. Previous reports did not include costs and, as I understand it, many of the figures quoted today are reports of profits from activities without taking into account costs. As I have said before during debates on the Crown Estate Bill, disaggregating activities requires a high degree of subjective judgment.
My noble friend Lord Murphy asked about funding for the Wales Government in the event of devolution of the Crown Estate. Even if devolution could be achieved without risking the revenues for Wales that the Crown Estate generates, this would not automatically lead to an increase in the funding available to the Wales Government. As agreed in the Scottish Government’s fiscal framework review, which concluded in August 2023, the Scottish Government receive a block grant reduction to reflect the profits they retain from Crown Estate Scotland following its devolution.
The noble Lord, Lord Wigley, and my noble friend Lord Murphy raised the Treasury Ministers’ discussions with the Welsh Government about the Crown Estate. In November, I met the Welsh Government’s Cabinet Secretary for Finance and Welsh Language. Our discussion covered a range of issues, including the Crown Estate. I reiterated the UK Government’s position that we do not believe devolution of the Crown Estate is in the best interests of Wales or the wider UK. More widely, the UK Government maintain regular ministerial and official-level engagement with the Welsh Government across a range of different policy areas.
The Crown Estate’s existing scale, expertise and track record mean it is uniquely placed to drive forward growth and investment in Wales. Wales continues to benefit from the funding generated by the Crown Estate, both through the UK Government’s spending in reserved areas in Wales and through funding for the Welsh Government via the Barnett formula. Devolving the Crown Estate at this time would significantly fragment the UK’s energy market, jeopardise the existing pipeline of offshore wind development in the Celtic Sea, undermine international investor confidence in the UK and significantly delay our progress towards net zero. It is for these reasons that the Government cannot support the Bill before your Lordships’ House. The Government will of course continue to discuss these issues—
Lord Thomas of Cwmgiedd (CB)
Before the Minister sits down, I want to press him on one point: the proportion of income classified in the accounts as derived in the marine sector from option fee and other income, some of which is straight-lined into the Consolidated Fund. Can he give the figure for Wales? As we have discussed, he was able to give it at an earlier point; it must be possible, and I would be grateful if he would write to the House and give us that figure. It is of huge symbolic importance to the people of Wales, and I do not want this Government to suffer 15 months hence.
Lord Livermore (Lab)
I am very grateful to the noble and learned Lord for his concern for the Government. I am told it is impossible to disaggregate the figures in the way that he has asked. I will double check that and write to him if I can, but I am told it is not possible to do that disaggregation.
Lord Thomas of Cwmgiedd (CB)
Forgive me for a moment, but I am quite used to arguing with accountants and I would be delighted to meet the Crown Estate to try to understand what the problem is. I believe it is accountancy gobbledygook that we cannot do it. Of course there will be an element of subjective judgment, but it can be done. If it cannot be done, please can I meet the accountants at the Crown Estate?
Lord Livermore (Lab)
I will happily suggest that to the accountants at the Crown Estate.
The Government will continue to discuss these issues with the First Minister and the Welsh Government, to ensure that Wales sees the full benefits of the Crown Estate.
Lord Wigley (PC)
My Lords, I am grateful to the Minister for his response and even more grateful to colleagues from all parties who have spoken in this debate. I am grateful for the support that has come from the noble Lords, Lord Murphy and Lord Anderson—albeit that he spoke earlier than he had intended, it was very welcome—the noble and learned Lord, Lord Thomas of Cwmgiedd, my colleague and noble friend Lady Smith, the noble Baronesses, Lady Bennett and Lady Humphreys, who has done so much work on this matter. I regret very much that my friend from Monmouth was unable to support the Bill, but he left a glimmer of hope that, if not now, there might be a time. Perhaps we can come back to that. With regard to the response of the noble Baroness, Lady Bloomfield, from the Front Bench, she recognised the case but said that the Government cannot at this stage move forward with it.
With regard to getting the maximum possible benefit from the elements that Wales has—wind, water and all the rest—around its coast, there needs to be cross-government co-operation between the Government of Wales in Cardiff and the UK Government. In order to facilitate that, the Crown Estate must surely see the benefit of the positive energy that comes from maximising the output from our own resources and arrange things in a way that encourages that to happen.
I hope we will get a Second Reading today and that we can go into a meaningful Committee stage. I noted the points the noble and learned Lord, Lord Thomas, made about that and look forward to it. These arguments will not go away. The Minister had discussions with his colleagues in Cardiff in November, I think, and I hope that he will keep in touch with them. I had a meeting a fortnight ago with our erstwhile colleague here, the First Minister of Wales. These are matters that are of concern to them, and they will arise in the election, on a new format, to the Senedd in Cardiff in less than 18 months’ time.
There is a need to get some co-ordination on this. Even if this Bill is not the vehicle, there must be some way of maximising the co-ordination and benefit that comes to Wales from the resources around our coasts. If it can be done for Scotland, surely it can be done for Wales too.