Tuesday 22nd October 2024
(6 days, 6 hours ago)
Lords ChamberCrown Estate Bill [HL] 2024-26 View all Crown Estate Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 5-II Second marshalled list for Committee - (18 Oct 2024)
Baroness Vere of Norbiton (Con)
My Lords, I rise to speak briefly on this group. I note that the noble Lord, Lord Berkeley, is not in this place and so was unable to speak to his amendment. I understand why the noble Earl, Lord Russell, has tabled his amendment, and I am grateful to him for his exposition of the background to it. On these Benches, we recognise the unusual role that the Crown Estate has in the stewardship of the assets held in the right of the Crown. We recognise, too, that the revenues from the assets do not belong to the sovereign, nor is any part of them payable directly to the monarch.
The issue here is one of communication. It must be—it is absolutely essential—that there be no perception of any direct financial link between the sovereign and any amounts received under the sovereign grant and the amount of revenue generated by the Crown Estate. Upon the announcement of the partnership with GB Energy, there was a perception from some of the more excitable end of the media that the sovereign was somehow party to, and specifically approving of, the arrangement. I encourage the Minister and commissioners of the Crown Estate to ensure that information in the public domain about the operation of the Crown Estate, but also any further partnerships that may come down the track, cannot possibly suggest any direct involvement from the sovereign and, therefore, that there should be no undue benefit accrued.
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, I am grateful to the noble Earl, Lord Russell, for his amendment and I will seek to address some of the points that he has raised. This amendment would require the Government, within one year of the passing of this Act and annually thereafter, to lay before Parliament a report into the effect of this Act on the size of the sovereign grant. The Government agree that it is important that there is transparency in how the sovereign grant is affected by changes in Crown Estate profits. Indeed, the Sovereign Grant Act 2011 includes a number of requirements that provide for regular effective review and reporting to Parliament.
As the noble Earl observed, under the Act, the grant for each financial year is set by reference to the profits of the Crown Estate. In broad terms, under Section 6 of the Sovereign Grant Act it is currently the higher of 12% of the Crown Estate profits two years previously or the previous year’s grant. For example, the level of the grant for 2025-26 will be set at 12% of the profits the Crown Estate reported in its annual accounts for 2022-23, published in July.
Section 7 of the Sovereign Grant Act provides for regular reviews of the percentage used in calculation of the grant to ensure the grant remains at an appropriate level. These reviews are conducted by the three royal trustees—the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse. The trustees must lay a copy of the report of their review before Parliament. The last review concluded in July last year and concluded that the reference rate should be reduced from 25% to 12%, reflecting an expected increase in the Crown Estate’s profits. The next review will commence in 2026, with a view to making any change to the grant calculation for 2027-28 onwards. As with previous reviews, it will consider both the future funding needs of the Royal Household and the likely future path of Crown Estate profits—including, of course, the effect of the Crown Estate Bill that we are debating today on those profits—to determine the appropriate percentage to use.
I should note in this context that the grant for 2026-27 will include the final tranche of funding for the current 10-year programme of reservicing of Buckingham Palace’s infrastructure. The percentage for 2027-28 onwards will therefore need to reflect the significant downward adjustment to the household’s funding requirements. The Sovereign Grant Act currently restricts the level of the grant itself being reduced from one year to the next. That provision was written into the Sovereign Grant Act to reflect the view that many of the duties of the Head of State cannot be abruptly stopped, and therefore it would not be appropriate to significantly reduce funding in response to a sudden drop in Crown Estate profits. That will, however, constrain the ability to reduce the grant by the likely appropriate amount once the reservicing of Buckingham Palace is complete. In 2016, when the previous Government agreed to provide funding for the resurfacing programme, they noted an intention to bring forward legislation to reset the level of the sovereign grant to an appropriate level once the reservicing works have been completed. I can confirm that it is also the intention of this Government.
Those statutory reviews therefore provide Parliament with a report of the impact of this Bill on the sovereign grant. They also provide a mechanism to ensure that additional Crown Estate profits do not lead to excessive funding for the Royal Household. Where that is not possible under the Sovereign Grant Act, the Government will legislate accordingly.
On reporting requirements, the Sovereign Grant Act also requires two further reports on the grant to be produced and laid before Parliament each year. First, Section 5 requires the royal trustees to produce a report annually stating the level of the grant for the following financial year and how that has been determined in line with a prescribed method set out in Section 6 of the Act. This report must be laid before Parliament. Secondly, Section 2 requires the Keeper of the Privy Purse to produce annual accounts relating to the Royal Household, including the use of the sovereign grant. In common with other central government bodies, the accounts are prepared in accordance with an accounts direction issued by the Treasury, audited by the National Audit Office and laid in Parliament. The Crown Estate Act 1961 also contains a requirement for the Crown Estate to produce an annual report and accounts.
The Government therefore agree that it is important that there is regular reporting to Parliament on how the changes in this Bill will impact the sovereign grant. As I have detailed, there is already a considerable set of statutory requirements in this respect and beyond.
Lord Livermore (Lab)
My Lords, I am very grateful to all noble Lords for the points raised during this debate and for powerfully highlighting such important issues. I will respond to the amendments tabled by the noble Lords, Lord Forsyth and Lord Douglas-Miller—who was the Minister for Animal Health and Welfare in the previous Government—and the noble Earl, Lord Leicester, which all touch on environmental and animal welfare protections.
These amendments would require the Crown commissioners to assess, on an ongoing basis, the environmental impact and animal welfare standards of, respectively, salmon farms, offshore energy installation and generation and aquacultural practices on the Crown Estate. Where that assessment determines that a salmon farm, a relevant offshore energy installation and generation, or relevant aquaculture is causing environmental damage or has significant animal welfare issues, the Crown Estate would be required to revoke the relevant licence. The commissioners would also be required to make the same assessment of any applications for new licences for salmon farms or the installation and generation of offshore energy on the estate. Where the commissioners determine that an application may cause environmental damage or raises significant animal welfare concerns, the Crown Estate must refuse the application.
The Government wholeheartedly support the objectives behind these amendments. It might help noble Lords if I set out the protections that currently exist in regulations and legislation, which apply regardless of the landlord. All aquaculture activity in England, including salmon farming, is regulated with the intention of ensuring that it is carried out in a responsible manner that respects the environment and protects consumer health and animal welfare, although I appreciate from the powerful speech by the noble Lord, Lord Forsyth, that this intent is not currently being achieved. At present, virtually all salmon aquaculture in the UK takes place in Scotland. As has been observed, the management of the Crown Estate in Scotland is a devolved matter.
The Government’s starting point is that these amendments may duplicate existing protections that already exist in legislation or protections that are required by regulators as part of the licensing process for aquaculture and offshore energy installations. Specifically, the Animal Welfare Act 2006 makes it an offence to cause unnecessary suffering to any protected animal. The assimilated Council Regulation No. 1099/2009 on the protection of animals at the time of killing requires that farmed fish are spared avoidable pain, distress or suffering during their killing and related operations. The Aquatic Animal Health (England and Wales) Regulations 2009 contain provisions to protect farmed fish from serious disease by introducing a system of authorisation for businesses involved in aquaculture.
To address a point on environmental impacts made by the noble Earl, Lord Leicester, the Conservation of Habitats and Species Regulations 2017 require the competent authority—in this context, the Crown Estate —to determine whether a plan or project is likely to have a significant effect on a European marine site. If so, it is then subject to an appropriate assessment. If that assessment shows that the plan or project could have an adverse impact on the integrity of the site that cannot be mitigated, authorisation of the activity must be refused unless specific derogations apply. For marine areas that are designated as a marine conservation zone under the Marine and Coastal Access Act 2009, a marine conservation zone assessment is carried out by the public authority to test activities that may hinder the achievement of the conservation objectives of the specific zone and decide from the assessments whether the application for an activity can be authorised.
The Crown Estate seeks to supports the regulators through the inclusion of necessary requirements on any leases and requires all practitioners to comply fully with all legal obligations, including animal welfare practices. When developing or managing its assets, especially in areas such as offshore wind farms, coastal management and urban redevelopment, the Crown Estate must comply with regulations that require environmental impact assessments. An example of this happening in practice was in February 2017, when the Crown Estate launched an opportunity for existing wind farms to apply for project extensions. Following a habitats regulations assessment, the Crown Estate confirmed that seven of these extension application projects would progress to the award of development rights.
The Crown Estate also received an application for an extension project where the majority of the site of the proposed extension sat within the Inner Dowsing, Race Bank and North Ridge special area of conservation. The plan-level habitats regulations assessment determined that it would not be possible to rule out an adverse effect on the integrity of the special area of conservation. Therefore, the Crown Estate decided that this extension project would not progress to the award of leasing rights as part of the 2017 extensions round.
On the point raised by the noble Lord, Lord Teverson, about looking at impacts holistically, that is exactly what this Bill seeks, by enabling the Crown Estate to map the whole seabed and therefore improve the understanding of how to ensure benefits for nature for the long term.
I would be interested to know in due course whether noble Lords consider that these existing regulations and the legislation are inadequate or are currently being inadequately applied. I hope that, for now, the noble Lords, Lord Forsyth and Lord Douglas-Miller, and the noble Earl, Lord Leicester, feel able not to press their amendments.
The Earl of Leicester (Con)
Is the Minister able to address the issue of pollution from all these crew transfer boats? I mentioned 125 million litres of diesel every year. If we are to have many more wind farms out to sea, that amount of diesel may get very large. Can he comment on converting these boats to electric?
Lord Livermore (Lab)
I am afraid that is not something I know about, but I am happy to write to the noble Earl.
Lord Forsyth of Drumlean (Con)
My Lords, I am grateful to the Minister for that reply, which was clearly written by Treasury officials who do not get out very much. The Minister has been kind enough to say that we should indicate whether we think the existing legislative requirements and regulations are working. We have just had an excellent debate, which has made it absolutely clear that wild salmon are being destroyed, not just in this country, but elsewhere, so the answer is: it is hurting, and it is not working. A very modest requirement on the landlords, the owners of the seabed to—
Lord Livermore (Lab)
Just to be clear, I wanted clarification as to whether the existing legislation could work, or, in itself, could not work.
Lord Forsyth of Drumlean (Con)
I would be very happy for the Minister to come back with an amendment that would indicate how it could be made to work, because it is not working. It seems to me a very modest measure that would say to the Crown Estate that it has given a licence to these people, so it is therefore under a duty to make sure that they act in accordance with all regulations and in a way which protects the environment for which they have responsibility. I cannot imagine why the Minister would reject that.
In view of the very inadequate response, I am very tempted to test the opinion of the Committee, but I will not because I hope that, perhaps in further discussions with the Minister, we can get an amendment which will actually offer some degree of protection to the hundreds of thousands of fishermen who are concerned about this, to the communities who are concerned about this and to the many, many people on a cross-party basis. I cite the example of the noble Baroness, Lady Jones, and I who are united; we are linked at the hip in our determination to make this happen.
However, I would like to thank everyone who has spoken in the debate in support of not just my amendment but that of my noble friend Lord Douglas-Miller, who made a very fine speech explaining precisely why things are not working. I am grateful to my noble friends Lord Trenchard, Lord Strathclyde, Lord Moynihan and Lord Caithness, the noble Baroness, Lady Jones, of course, and the noble Earl, Lord Kinnoull—it is quite a gathering. The Minister ought to go back and think about this again, and we will table a further amendment on Report.
I am most grateful to my colleague my noble friend Lord Roborough for the support that he gave to this amendment and his careful consideration. I have to say that I am not sure the Minister’s officials have shown the same diligence in looking at what is a major problem which, if not tackled with immediacy, will see the extinction of the wild salmon in this country. That is not something that any Government would want on their record. Given the response, I beg leave to withdraw my amendment.
Lord Roborough (Con)
My Lords, I am afraid that I may not entirely agree with the noble Baroness, Lady Kramer, on this. I agree with the intention of this amendment from the noble Earl, Lord Kinnoull, and the noble Lord, Lord Vaux of Harrowden. While we also acknowledge that the Crown Estate in Scotland is devolved, the entity remains closely aligned in its nature and the objectives sought from it, with considerable overlap in the kind of assets that are owned and managed. The Bill before us creates considerable new powers for the Crown Estate of England, Wales and Northern Ireland. First among those is the power to borrow, with the benefits to investment and flexibility that that allows. It also creates new obligations—hopefully, to include taking full responsibility for the environmental impact of offshore energy and fish farming. Those are not present in the devolved Crown Estate of Scotland. As noble Lords have described, it may well be helpful if the Minister committed to providing clear information on those differences once the Act has been implemented in order to allow both entities to learn what is best practice. Oversight and transparency are desirable in all areas of government, and I am most interested to hear the Minister’s response to this amendment and debate.
Lord Livermore (Lab)
My Lords, Amendment 37D, tabled by the noble Earl, Lord Kinnoull, would require the Secretary of State to lay a report before Parliament within 12 months of the day this Act is passed that assesses any differences between the provisions made by this Act for the management of the Crown Estate in England, Wales and Northern Ireland, and equivalent provisions for the management of the Crown Estate in Scotland.
It is possible now to provide such an assessment, and I am happy to set that out. Section 36 of the Scotland Act 2016 inserted a new Section 90B into the Scotland Act 1998. Subject to certain exceptions, Section 90B provided for the devolution in relation to Scotland of the commissioners’ management functions relating to property, rights or interests in land in Scotland and rights in relation to the Scottish zone.
Devolution occurred on 1 April 2017 under, and in accordance with, the Crown Estate Transfer Scheme 2017. The relevant property, rights and interests are now managed separately by Crown Estate Scotland under the Crown Estate Scotland (Interim Management) Order 2017 and the Scottish Crown Estate Act 2019, as enacted by the Scottish Parliament. They do not form part of the Crown Estate as currently managed by the Crown Estate commissioners.
The relationship between Crown Estate Scotland and the Scottish Government is governed by a public framework document which sets out a broad framework within which Crown Estate Scotland operates, and certain financial aspects. Any changes to that framework document or the wider legislation that underpins it are a matter for the Scottish Government.
I turn to the principal differences and similarities. The Bill grants the commissioners of the Crown Estate a power to borrow with Treasury consent and provides the Treasury with the power to issue loans and financial assistance to the commissioners, including out of the National Loans Fund. The Bill also specifies that the Treasury may determine the rate of interest on any loan and requires the Treasury to pay any sums received in respect of the loan into the National Loans Fund.
In comparison, Part 2, Section 1.1 of the framework document for Crown Estate Scotland explains that
“Scottish Ministers may make grants and loans to Crown Estate Scotland”
and such grants and loans are
“subject to such conditions (including conditions as to repayment) as the Scottish Ministers may determine”.
Part 2, Section 2.1 requires that:
“All borrowing by Crown Estate Scotland … shall be from the Scottish Ministers in accordance with guidance in the Borrowing, Lending & Investment section of the”
Scottish Public Finance Manual.
On investment, this Bill clarifies the commissioners’ existing ability to invest by inserting into the 1961 Act that:
“The powers exercisable by the Commissioners in the discharge of their functions under this Act include powers to do anything which is calculated to facilitate, or is conducive or incidental to, the discharge of those functions”.
It also omits subsection (4) from Section 3 of the 1961 Act, which will broaden the commissioner’s investment powers.
In comparison, Part 1, Section 3.2 of the framework document for Crown Estate Scotland explains that Scottish Ministers are responsible for
“approving Crown Estate Scotland’s Corporate Plan”,
which includes their investment strategy. Part 2, Section 7.3 requires Crown Estate Scotland to
“undertake investment in line with its legislative duties”,
which are set out in the Scottish Crown Estate Act 2019, principally in Part 3, across Sections 7 to 21.
On the constitution of the commissioners, the Bill increases the maximum number of commissioners from eight to 12 and omits the requirement that the second Crown Estate commissioner, if any, be deputy chairman. It also simplifies the legislative process by which commissioners are paid, such that the commissioners’ salaries and expenses are paid directly out of the income of the Crown Estate, rather than out of money provided by Parliament, which comes from the return made by the commissioners to the Government each year.
In comparison, under Part 1, Section 3.5 of the frame- work document for Crown Estate Scotland, the board membership is limited to nine members, including the chair. On remuneration, Section 7 of the Crown Estate Scotland (Interim Management) Order 2017 makes it clear that
“Crown Estate Scotland … must pay each member such remuneration and allowances (including expenses) as the Scottish Ministers may determine”.
The differences between these two organisations reflect the fact that the organisations have formed in different ways. The 1961 Act, which, as I have set out, is the legislative basis of the Crown Estate in its current form, was fulfilling a recommendation of the government Committee on Crown Lands—as set out in its report presented to Parliament in June 1955—to appoint an independent board of commissioners to manage the Crown Estate, with provisions designed to enable Parliament and the Treasury to know how it is discharging its responsibilities. To briefly quote from the 1955 report:
“The board should be a public authority, but not a government department in the sense of an organ of executive government. … We do however respectfully advise that the board should be more, not less, independent than the present Commissioners and that they should be given defined powers and duties as trustees and allowed to work them out with the minimum of direction and control.”
In comparison, Crown Estate Scotland was created by the Scottish Crown Estate Act 2019, which makes specific provisions about the management of the Scottish Crown Estate and followed on from a process of devolution established by the Scotland Act 2016. Crown Estate Scotland is specifically required to align its aims and objectives with the Scottish Government’s published programme for government, and Scotland’s economic strategy and national performance framework.
I hope this assessment was helpful and that I have provided some clarity on the points raised.
The Earl of Kinnoull (CB)
It is very interesting that the Minister has not mentioned—unusually, because he is always incredibly well briefed—the Crown Estate Transfer Scheme 2017, which was the scheme under Section 90B of the Scotland Act, under which this was transferred. Schedule 4 of that is headed, “Protection of UK-wide interests”, which is quite a thing, and the subject we have been talking about this afternoon. I wonder whether he would comment on that and how it affects the assessment that he has just made.
Lord Livermore (Lab)
I am happy to write to the noble Earl on that point. In the meantime, I hope he will feel able to withdraw his amendment.
Lord Forsyth of Drumlean (Con)
The Minister has not really addressed the fundamental point made by the noble Earl, Lord Kinnoull: fish and birds do not know where the border is between Scotland and the rest of the United Kingdom, and there are common interests. All he has done is read out a list of regulations and statutes that apply to the two commissions. I think the noble Earl was asking what provisions can be made, so that the two sets of commissioners are able to operate in the interests of the United Kingdom as a whole. As a unionist, he will surely appreciate the importance of that.
Lord Livermore (Lab)
What I read out was a response to the amendment tabled, which asked for exactly that; that is why I read it out. The noble Lord raises profound constitutional questions which I may not be the right person to address them to.
The Earl of Kinnoull (CB)
I asked a question as well: is the Minister going to afford every assistance to what is going on? This is something worth discussing. There is a danger here, and it is in the interests of all of us, as sub-owners of the Crown Estate, that the position is regularised. I am sorry if symmetry is too strong a word because they are differently enacted, but it is important to be in a position where they have very similar powers. It is in the interests of everyone in these islands that the two things can work together when required and that they have similar powers, so they can engage in the same energy deals and the same things in aquaculture.
Lord Livermore (Lab)
I am very happy to have that meeting. I do not know whether the noble Lord does want to join, but of course he is always welcome.
Baroness Kramer (LD)
My Lords, I confess that I was fascinated by the amendments put down by the shadow Minister, the noble Baroness, Lady Vere, whom I remember on many occasions defending Henry VIII clause after Henry VIII clause. She is now calling for extraordinary levels of accountability, but I suppose going into opposition somehow changes a perspective.
The documents that have been requested, which is the main content of this group of amendments, are, in essence, documents that I requested at the beginning of the process. The Minister has been generous, in a way that I think would not have happened in the past, to assure us that those documents will be made available before we reach Report so that, at that final stage of the process, we have enough information to know whether we need to challenge the content of the Bill or can accept it. I am satisfied to take his word for it, as his comments were made on the Floor of the House.
If the Minister can add anything about timing or content, that would be interesting. We had some confusion at one point about what is a memorandum of understanding and what is a framework agreement, but that has been clarified. I am satisfied that we are getting more information from this Government than, frankly, I ever could have hoped for, on similar issues, from the Government before.
Lord Livermore (Lab)
My Lords, I will respond to the amendments tabled by the noble Baronesses, Lady Vere of Norbiton and Lady Smith, the noble Lord, Lord Wigley, and my noble friend Lord Berkeley, which all seek to alter the timing of the Bill’s commencement.
I start by addressing Amendment 42, tabled by my noble friend Lord Berkeley. This amendment would alter the commencement of the Bill, so that it comes into force either two months after the Bill has passed or after the Crown Estate commissioners have published the Crown Estate’s lease extension policy and a Minister of the Crown has tabled a Motion in both Houses to debate the policy—whichever is later.