Crown Estate Bill [HL]

Lord Holmes of Richmond Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Lord Howard of Rising (Con)]

My Lords, I rise to speak to Amendment 8. There should be a limit on the level of borrowings that the Crown Estate can have. It would be irresponsible to issue a blank cheque that risks, even encourages, abuse by the political system. At Second Reading, I suggested that a limit could be set as a percentage of capital reserves, and I proposed 10% as an appropriate amount. When added to the Crown Estate’s cash position, 10% would retain a generous amount of flexibility while guarding against the risk of abuse and overborrowing. Amendment 8 does just this. I thank the Minister for seeing me to discuss my amendment, but regret that he did not agree with the principle that a limit on borrowing is necessary. He believes that the approval needed by His Majesty’s Treasury would act as a sufficient safeguard. There are two important reasons why I believe that this is not the case.

First, relying on the good intentions of His Majesty’s Treasury to provide the necessary safeguards is simply insufficient. The First Lord of the Treasury is the Prime Minister. There is also the Chancellor of the Exchequer, who could, if the political ambition was sufficient, persuade His Majesty’s Treasury that a loan to the Crown Estate was desirable. The Minister said at Second Reading that he did not envisage the Crown Estate borrowing in the near future. However, there may be a less responsible Government in the future who may make use of this possible sleight of hand to encourage profligate or political spending.

Secondly, if a current or future Government wished to disguise spending, it is possible for the Crown Estate commissioners to carry out the desired spending for the Government with funds provided by the Treasury. Loans to the Crown Estate would be classed as an asset, meaning that the spending would be seen not as an expense but as a capital asset. Without restrictions on borrowing, there is an incentive for future less responsible Governments to increase lending to very high levels. A limit on the Crown Estate’s borrowing would go some way towards safeguarding against this. However, I also welcome Amendment 10, in the name of my noble friend Lady Vere of Norbiton, which provides another safeguard against this happening by ensuring that loans made to the Crown Estate are included in the Government’s assessment of the national debt.

I remain concerned about the lack of safeguarding against excessive borrowing, which poses a significant and unnecessary risk that the Crown Estate does not need to continue operating successfully. As we have heard, I am not the only member of this House who has concerns about permitting the Crown Estate limitless borrowings from His Majesty’s Treasury. Amendments 2 and 5, tabled by the noble Earl, Lord Russell, and Amendments 3, 4, 6 and 7, tabled by my noble friend Baroness Vere of Norbiton, all propose alternative limits to borrowing which would be quite acceptable. Should the Minister find these amendments too restrictive, Amendment 8 provides him with a generous alternative.

Finally, as the Minister has been made aware, I would like to degroup Amendment 9; as such, I will save my comments on it for the next group. I apologise for any inconvenience this may cause the House, but having reflected on the matter, I feel it important to deal with that amendment separately.

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to follow my noble friend and agree with many of his comments, and to give more than a nod to the amendments in the name of my noble friend Baroness Vere of Norbiton.

I rise to speak to Amendment 20 in my name. The Crown Estate has a unique position in our society, our economy, across many of our communities and right around our shoreline. This position will only be increased and enhanced through many of the measures set out in this Bill, not least the yet to be discovered tie-up with GB Energy. To this end, my Amendment 20 seeks to put in statute the principle of additionality for all spending decisions of the Crown Estate. It seems sound that, given the potential not least of offshore wind, the activities of the Crown Estate cannot at any point be seen to be crowding out other private funds. An additionality principle which seeks to apply measures on crowding out and ensure crowding in, and a report to that effect, would be not just a principle of additionality but a good addition to this Bill. I look forward to the Minister’s comments.

[Baroness Kramer (LD)]

My Lords, I want to pick up the point made by the noble Lord, Lord Holmes. That would be an attractive proposition if we were dealing with a “have regard”, but asking the Crown Estate to go through an extensive exercise to find out what every competitor wants to invest in would be far too challenging. However, as an underlying principle, through a “have regard”, that might be a workable way to address that issue.

I want to come back to the body of the amendments. I was fairly hopeful that we would not have to come forward with these amendments because we would have seen the language, or at least the essence of the language, that was going to be in the new framework agreement. The Minister fully accepts that the existing framework agreement completely misses the point and is unfit for purpose when it comes to adding new borrowing powers. For those who have not made the effort to look the current framework, it says that the Crown Estate may not borrow money “on security or otherwise”. There are some small exceptions for day-to-day running and working capital-type things, but that is about it. Then, the framework says that the Crown Estate’s exposure to indirect borrowing through joint ventures—this is the way the Crown Estate, in effect, has borrowed: by creating joint ventures that then go out into the market—will be no more than 40% in one vehicle, and in aggregate should not exceed 10% of the Crown Estate’s net asset value. Something along those lines strikes me as extremely appropriate and would, I think, seem appropriate to most of this House.

I raised ahead of Second Reading, and on Second Reading with the Minister, that we have never seen a business case that argues why additional borrowing or additional funds are necessary. This is an entity that is sitting on some £2 billion in cash—why is this necessary? I do not think we are opposed to this, but if we are going to approve it, it makes sense to see the thought process behind it. The Minister was quite hopeful: he said that he was happy now to commit to publishing a version of the business plan, approved by the last Government, which removes any commercially sensitive information. That was a really satisfactory step, but we have not seen it. I suppose I am slightly surprised that it is been so difficult to just black out the commercially sensitive bits, and I wonder when we are going to see it.

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[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in this group of amendments, not least to give full-throated support to my noble friend Lord Young of Cookham, who gave us an excellent lesson in escheat and how it is being applied by the Crown Estate. He took us on a whirlwind journey, from “Monty Python” to “Yes, Minister”, without needing at any point to go near Mornington Crescent. He also added greatly to the work of land law scholars across the country with the new common-law concept of the resting parrot freehold. I hope the Minister will respond in the only way possible to such a clear and erudite presentation from my noble friend—with a clear, unequivocal agreement to every last word.

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Moved by

[Lord Holmes of Richmond]

14: After Clause 2, insert the following new Clause—
“Duty: protection of the seabed(1) The Crown Estate Commissioners must take steps to protect the seabed which forms part of the Crown Estate.(2) Protection under subsection (1) includes prohibiting all activities, business practices, leisure pursuits and other actions which damage permanently or temporarily the seabed.”

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to begin the next group of amendments. I shall move Amendment 14 and speak to Amendments 15 and 17 in my name. In doing so, I draw attention to my technology interests as set out in the register. I also had a Private Member’s Bill, the Artificial Intelligence (Regulation) Bill, in the last Session.

We have already covered a wide range of incredibly important issues pertaining to the activities and operations of the Crown Estate. I gently and delicately suggest that Amendment 14 goes to perhaps the most significant issue that we could consider: the protection of the seabed around the United Kingdom. It is not an asset, nor a funding decision or a piece of plant or machinery, but the very bedrock of the ocean—one of the most important parts of our planet. There are currently practices, business and otherwise, carried on daily that temporarily and permanently damage the seabed. If such activities were taking place on the Crown Estate’s lands—for example, stripping away all the topsoil or taking away all the foundations of the buildings—it would of course not be permitted and be swiftly stopped, so why can the seabed which comes under the custody of the Crown Estate be so abused? Again, it is not an asset or a property, or a piece of land, but Poseidon’s pastures, and we must take this opportunity to protect them.

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[Lord Holmes of Richmond (Con)]

My Lords, I thank everybody who has taken part in this incredibly important debate, and the Minister for his thorough answer. All I would gently suggest is that if all those provisions, policies and words are having impact, how come the scarring, scraping, defacing and destruction of the seabed continues? Not being one to shy away from sporting analogies, I hazard a guess that the issues raised in this group of amendments could well bring the Government to their first game of ping-pong in this new Session; but for now, until Report, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

Crown Estate Bill [HL]

Lord Holmes of Richmond Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

Moved by

[Lord Holmes of Richmond]

16: After Clause 2, insert the following new Clause—
“Report: energy generation on the Crown Estate(1) Within 12 months of the passing of this Act, the Crown Estate Commissioners must publish a report on the potential for energy generation on the Crown Estate, including consideration of offshore wind turbines and onshore wind turbines.(2) The report under subsection (1) must also assess the potential impact of wind turbines on the Crown Estate on grid capacity and energy pricing.(3) The report under subsection (1) must be submitted to the Secretary of State and laid before Parliament.”

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to introduce this group of amendments. In moving Amendment 16, I will give a nod to the other amendments in the group.

This amendment is incredibly straightforward; it simply seeks to assert that generation must match grid capacity and that we should always consider, when moving to these new modes of generation, who pays and when. I say that generation should match grid capacity, but perhaps that should be put the other way around to make the point that grid capacity must be in place before generation, particularly from offshore wind, comes on stream. I would welcome the Minister’s response as to what is currently set out in the Bill to guarantee that grid capacity will be in place and that we will not have a situation whereby there will be surplus generation that is unable to be taken up by the grid and is still paid for and unused—and that pay comes from the energy customers themselves.

How will it be ensured, as we move to this right green transition for energy production, that where the costs fall does not have catastrophic consequences? Presently, it seems unclear in the current structure of the Bill how this grid connectivity and capacity will come online to match the potential race for supply, particularly from offshore.

Amendment 16, in simple terms, would ensure that grid capacity exists before generation can come onshore and, in that, would ensure that payment is spread fairly across the bill payers—and that those at the sharpest end do not feel the most extreme cost as a result of this transition, as often happens. I beg to move.

[Lord Teverson (LD)]

My Lords, I shall be brief. I actually want to say something quite positive about the Government’s approach to this at the moment. I understand the issue completely: offshore wind is a complete waste of time if you cannot connect it to the consumers. That is obvious, and it has not been managed well. I very much welcome the Government’s commitment to achieve that in future, but we had on 1 October the foundation of the National Energy Systems Operator, whose whole role is to make sure that this works. When we passed the Energy Bill that set this up, we did not really give it enough power. It would be very good to hear from the Minister that that will be in progress and will actually happen.

Secondly, there is so much at risk for offshore developers. Yes, they can get their contract, their lease and their contract for difference in terms of the price for the low-carbon company. But at the end of the day, if developers do not believe that there is going to be a grid connection, they will not carry out their investment, so it is absolutely in everybody’s interest that we do this. A really good point has been made to the Minister, and I look forward to his assuring us that NESO— the new organisation from 1 October—will have some clout in government decision-making and will co-ordinate this effectively. It needs to have the power and influence to do so, rather than simply being an advisory organisation whose recommendations are ignored because of other private or public finance investment reasons.

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I hope these explanations have been helpful and that the noble Lord, Lord Holmes and the noble Baroness, Lady Vere, will not press their amendments as a result.

[Lord Holmes of Richmond (Con)]

My Lords, I thank the noble Lords who have taken part in this debate, and I thank the Minister for his response and for the helpful clarification between the framework document and the MoU. With that, I beg leave to withdraw the amendment.

Amendment 16 withdrawn.

Crown Estate Bill [HL]

Lord Holmes of Richmond Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to take part in this Second Reading debate. As Mark Twain entreated:

“Buy land, they’re not making it any more”.


The Crown Estate has a diverse portfolio of land, shore and sea assets, which gives it a unique opportunity to play a role in our transition not just to green energy but to a new economy and a new future for the nation. I will focus my comments around economic, environmental and governance issues, and will deal with economic issues first.

I note the proposal for increased borrowing powers for the Crown Estate, but what limits are on this? It seems to me that if we want to enable the Crown Estate to be more connected to the country and to the communities that it ultimately serves, perhaps we should consider financial instruments, such as public bond issues, for people to participate directly in some of these proposed schemes. Similarly, does the legislation allow for joint ventures going far beyond just leases for the Crown Estate to play its part in a particular development? On land, if we look at some of the issues around the new technologies that we will need for our future economy and development, would the Crown Estate be allowed to, for example, exchange rent for equity shares?

One of the most promising opportunities, as mentioned by other noble Lords, is floating offshore. It is a nascent technology in which the United Kingdom could play a leading role. To that extent, are the proposals set out in the documentation realistic in suggesting five gigawatts by 2030? Is this a large enough stretch target in that it will largely be in this area where we really drive opportunities beyond the simple receipts we get from static platforms? This is where we can drive new technologies, IP, skills and employment far more than the existing offshore wind, which in many ways, from the United Kingdom’s perspective, has somewhat passed us by from a technology point of view.

What will be in place to speed up the timeline for developing these projects? Is it proposed that the CfD and seabed licences processes will be integrated, which would be a positive move? Can the Minister clarify that? Similarly, what work is being done to ensure that this will always be crowding in, rather than potentially crowding out, private sector investment?

Many noble Lords have rightly mentioned grid connectivity. It is vital, and more important than wind generation itself, because we must appreciate that not only is there no point in generating from wind if we cannot bring it on grid but worse than that is paying billions to generators not to produce, as is currently the case, and those billions currently go on to bill payers’ accounts. What is the plan to ensure that the grid will not lag but will be ahead to take on all this increased generation? Indeed, as noble Lords have commented, at certain points in the year we may well be able to export this wind capacity.

Moving on to environmental questions, does the Minister agree with noble Lords’ comments that the Crown Estate could do much more in terms of biodiversity and in taking steps to help with climate adaptation, such as sea-grasses, kelp and the amount of the estate that is currently not used for those measures? Does he agree that the Bill provides the opportunity to bring forward a prohibition on all sea-bottom trawling and other practices that are effectively damaging and destroying these vital assets?

Similarly, does the Minister agree that there is an opportunity for the Crown Estate, with its nature and its shoreline resources, to play a key role in helping mental well-being? The concepts of social prescribing and nature prescribing have already been rolled out in various parts of the country. It seems to me that the Crown Estate could play a lead role, perhaps partnering with NHS England and health organisations in the devolved nations, in bringing about such a positive element for the well-being of citizens right around the United Kingdom.

While we are on the United Kingdom and devolution, I agree wholeheartedly with my noble friend Lord Bourne, the noble Lord, Lord Wigley, and the noble Baroness, Lady Smith. Surely the Minister must accept that there is no logic or consistency and that the current Crown Estate situation in Scotland and Wales cannot continue. The Bill provides the opportunity to put the situation in Wales and Scotland on a similar footing for the benefit of the entire United Kingdom.

On the question of governance—as other noble Lords, not least my noble friend Lord Young and the noble Lord, Lord Berkeley, have mentioned—does the Minister agree that what is currently set out in the Bill does not go far enough to enable the claim that this is bringing the Crown Estate into the 21st century? The Bill makes some good suggestions, but far more should and could be done. For example, how are we ensuring that these new Crown commissioner posts will really bring the full richness of inclusion and diversity that exists right across this country? Similarly, does the Minister agree that the opportunity exists to clarify a number of provisions in the 1961 Act that are not currently addressed in the Bill?

The Crown Estate has a unique place, as has been identified by speeches around the House, and it has a unique potential role to play in environmental security, economic security, technology and cybersecurity. Perhaps the greatest question we should focus on as we go into the latter stages of the Bill is to ensure that we realise all these benefits while having a laser focus, not least during this transition period, on who pays.