Crown Estate Bill [HL]

Lord Lansley Excerpts

Report stage
Tuesday 5th November 2024 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, I shall speak briefly to Amendment 15 in the name of the noble Lord, Lord Berkeley, which deals with lease extensions from the Crown Estate. I may do so with less republican overtones than we have just heard.

Those who have been following the proceedings of the Bill will know that I have raised the question of what happens to freeholds when they end up in the hands of the Crown Estate under an obscure process known as escheat. When a freeholder of a block of flats disappears or goes bankrupt, by default the freehold goes to the Crown Estate, whose policy is then to dispose of it, getting the best value, as is required by the 1963 Act. I raised the issue as to whether that obligation was trumped by a subsequent undertaking given by the Crown Estate to dispose of freeholds or extend leases in accordance with Acts relating to leasehold reform, when they would get less than market value.

In September I got a letter from the Minister saying that, against this backdrop, the Crown Estate

“does not believe the 1992 parliamentary undertaking applies to escheat”.

That crystallised the problem. On the one hand, clear undertakings had been given to Parliament by the Crown Estate that it would respect the Leasehold Reform, Housing and Urban Development Act 1993, which I happened to put on the statute book, but on the other hand, it would not respect it when disposing of freeholds back to leaseholders.

We then had a meeting with the Minister and the Crown Estate. I am most grateful to the Minister for his role in initiating it. At that meeting it became clear that, contrary to what the letter said, the Crown Estate would abide by the leasehold reform Act. This undertaking is now reproduced in the draft framework agreement, which says that the Crown Estate should comply with

“all public undertakings given on its behalf by ministers in Parliament to follow the law ‘by analogy’ where Crown bodies are not bound by the specific legislation in question”.

While issues remain in the specific case that I raised with the Minister, which I will pursue with him offline, I regard the principle as satisfactorily resolved and am grateful to him for the role he played in securing that agreement.

I end with one final suggestion. The process of escheat brings windfall gains to the Crown Estate. When a freeholder disappears or goes bankrupt, the Crown Estate acquires the freehold but, crucially, under the process of escheat, it does so free of any obligations that may have accrued to the previous freeholder. It then disposes of it, with a fee paid by the purchaser. This income is different from the rest of the income of the Crown Estate and should be shown separately in its accounts. I had a look to see whether this was the case, but could not find it. One could argue that these windfall proceeds are rather like unclaimed bank accounts and should go to charity via the Reclaim Fund, but that is a matter for another day. Does the Minister agree with the accounting change I have proposed?

[Lord Lansley (Con)]

My Lords, I agree with my noble friend on the Front Bench about the desirability of there being some form of prior parliamentary scrutiny over the appointment of a chair of the Crown Estate. My entry in the register of interests shows that I am chair of the Cambridgeshire Development Forum, of which the Crown Estate is a member. Sir Robin Budenberg has done a very good job but is retiring, so a question will rapidly arise. As we consider the Bill and think that it has been 63 years since the Crown Estate Act 1961, there is a good case for the public interest to be examined through that scrutiny when somebody is appointed whose principal purpose will probably be to represent the public interest in relation to the continuing functions of the Crown Estate.

However, I do not agree with my noble friend about Amendment 14. It probes the question—I hope the Minister will see it in that light—of how the disposal of assets by the Crown Estate is properly scrutinised. Noble Lords will recall that in Committee I referred to the duties of the Crown Estate commissioners under the 1961 Act, which the Minister just referred to. I also referred to their duty under Section 3 of that Act not to dispose of assets other than on

“best consideration in money or money’s worth”.

Given that we are trying to maintain the Crown Estate’s commercial operations, with prudential limits in relation to those assets, the duties in the 1961 Act should suffice.

I hope my noble friend will not press Amendment 14. Given the role of the Crown Estate as a major developer of potentially significant interest in the science parks to the north of Cambridge, for example, its disposals as a major developer may easily and rapidly reach £10 million in the course of a year. The bureaucracy and intervention that would be required thereafter by this amendment would be unreasonable, and I do not want us to impose those kinds of onerous obligations on the Crown Estate commissioners. If they fail to meet their duties, we can see that there are means by which the Treasury can intervene in order to establish that those duties are being met.

[Earl Russell (LD)]

My Lords, I rise briefly to speak to Amendment 2 in the name of the noble Baroness, Lady Vere of Norbiton. This simple amendment seeks that the chair of the Crown Estate commissioners be appointed by the Treasury Select Committee. On these Benches, this seems like a reasonably sensible idea. This is an important appointment and should have an adequate level of pre-appointment scrutiny.

I welcome the letter from the noble Lord, Lord Livermore, sent yesterday, pointing out the established process for the Cabinet Office and that this could be added to the pre-appointment scrutiny list. To our minds, that is a very sensible answer and a way forward. It is a way of resolving this issue. My only real question in relation to this is that the Minister says this will be done in “due course”. Can he give us a clearer idea of what he means by that? What is the timeframe?

Further to that, in relation to the amendment from the noble Lord, Lord Hain, calling for commissioners from individual countries to be appointed to the Crown Estate, I ask the Minister: will those appointments also be subject to this type of pre-appointment scrutiny?

I turn now to Amendment 14, also in the name of the noble Baroness, Lady Vere. It seeks to require the approval of His Majesty’s Treasury for the disposal of assets over £10 million, and the commissioners to inform the Treasury if assets over a value of £10 million are disposed of in a single year, then requiring the Treasury to approve of the disposal of those assets and to report that to Parliament within 28 days.

Again, the noble Lord, Lord Livermore, responded to this in his letter to all Peers yesterday, and we welcome that response. The Minister pointed out that this was a complicated matter, and that he would bring forward an amendment to address this concern. His engagement with that is welcome. This is an important issue—assets should not be disposed of by the Crown Estate without ministerial approval—but I seek further clarification from the Minister. When he says that this will be brought forward, will it be before Third Reading in this House? If it is not possible to bring that clarification forward before Third Reading, can the Minister give an undertaking that it will happen before Report in the other place?

On this amendment, our preference is that a compromise way forward is agreed. In fact, both amendments are matters that should be resolved without resorting to testing the opinion of the House.

Crown Estate Bill [HL]

Lord Lansley Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Baroness Smith of Llanfaes (PC)]

My Lords, I will speak briefly to Amendment 22 in my name, which is included in this group of amendments. I also add my support to Amendment 18 from the noble Lord, Lord Holmes of Richmond, on inclusion in governance and Amendment 24—my noble friend Lord Wigley will follow with further commentary—on the transparency of financial reporting.

One of the aims of bringing forward the Crown Estate Bill was to increase the number of commissioners on the board. Increasing the size of the board is a good opportunity to reflect on its composition, and I share the curiosity of the noble Baroness, Lady Vere, in relation to what the Government hope the additional commissioners will add, specifically, to the committee.

At present there is no representation from our national Parliaments on the board, which makes investment and borrowing decisions across England, Wales and Northern Ireland. Having representation from our national Parliaments on the board will improve the Crown Estate’s alignment with the public policy aims of our national Parliament, in particular on crossovers with policy on devolved areas such as energy and the environment. My amendment would give each of our national Parliaments where the Crown Estate has activities the opportunity to nominate a representative to the board.

This amendment provides a meaningful mechanism for our democratically elected Parliaments to have a say on decisions made by the Crown Estate. I welcome support for this amendment from all corners of the Chamber and look forward to hearing the Government’s position too.

[Lord Lansley (Con)]

My Lords, I briefly intervene on this group of amendments, not least to support my noble friend Lord Young of Cookham in the point he made. I think it raised—as did Amendment 31 from the noble Earl, Lord Russell—the question of the interpretation and interaction of the powers in the 1961 Act and how they are being used. I want particularly to raise one issue with the Minister. I should also say that in the register of interests noble Lords will see that I chair the Cambridgeshire Development Forum, and the Crown Estate is a member of that, although I do not think any of its activities or that interest impinge on this Bill in any way.

My noble friend Lord Young of Cookham referred to the way in which the Crown Estate interprets its statutory duty in Section 3(1) of the 1961 Act, which says that it must secure

“the best consideration in money or money’s worth”

in

“all the circumstances of the case”.

That is indeed what the statute says, but I have had the benefit of looking at the Crown Estate Act and talking with officials. I am grateful for their time, not least because it seems to me that there is an inherent restriction on the function of the commissioners which, as the Minister earlier made clear, is in Section 1(3) and sets out that they should “maintain and enhance” the value and return obtained from the estate with

“regard to the requirements of good management”.

As far as I understand it, the view of the Government and the Crown Estate is that, over 60 years or thereabouts, the requirements to obtain best consideration in money or money’s worth have effectively been trumped where necessary by the function of the commissioners, particularly as regards securing the requirements of good management. My first question to the Minister is: in the light of what the noble Lord, Lord Young of Cookham, was saying, does he agree that the requirements of good management in that instance mean that the Crown Estate would live by the practice of other public authorities, or those with public responsibilities, in relation to the interests of the leaseholders?