Crown Estate Bill [HL]

Lord Wigley Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

Moved by

[Lord Wigley]

1: Clause 1, page 1, line 8, at end insert—
“(4B) The functions of the Crown Estate in Wales may not be exercised without the consent of the Welsh Government.”Member's explanatory statement
This amendment would require that the Crown Estate must receive the consent of the Welsh Government before exercising its powers in Wales.

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[Lord Wigley (PC)]

My Lords, I will move Amendment 1 and speak to Amendment 23, both of which are in my name. I am grateful to the noble Baroness, Lady Humphreys, for adding her name to the amendment, and of course to my noble friend Lady Smith of Llanfaes, who no doubt will wish to address Amendment 21 in her name, which I support. I also support Amendment 26 in the name of the noble Baroness, Lady Humphreys, which we will come to later.

At Second Reading, I outlined the case for the Crown Estate in Wales to be devolved as it is in Scotland. That is the subject of a Private Member’s Bill that I have awaiting a Second Reading debate. Although many of these amendments overlap with that fundamental approach, there are other amendments not going quite as far as full devolution proposals which, none the less, could help meet Welsh grievances regarding how it is widely seen that the Crown Estate, as currently administered, does not address Welsh needs or concerns, and, indeed, sucks valuable resources out of Wales.

This issue has boiled up further since Second Reading, with a number of local authorities in Wales that are really strapped for cash, as indeed local authorities are in England, protesting at the bill demands which the Crown Estate makes of them. Let us take as an example the position of my own local authority, Gwynedd Council. This year it is being asked to pay a staggering bill of £160,000 to the Crown Estate to permit access to and full use of its own land and facilities within its own territory. The council has to pay the Crown Estate an annual rent for access to the beach in Bangor, Barmouth and Llanaber and a staggering £144,000 a year in rent relating to the marina in Pwllheli. Access to beaches touches a raw nerve in Wales; when private citizens have tried to close a footpath access, they have triggered massive protest and have had to back down. Yet the Crown is allowed to tell us that we have to pay for use of our own land and our own coast in our own country and can charge for the use of that privilege with impunity.

Gwynedd Council now faces cutting back on other services to pay the Crown Estate. A motion was moved by councillor Dewi Llewelyn in full council meeting on 3 October, and the council resolved to refuse to pay this charge. The motion also called for the control of Crown Estate land and profits in Wales to be devolved to the Welsh Government. We await developments, but other councils in Wales are also now considering similar steps. No one can say that there has not been adequate warning that the Crown Estate issue in Wales is flaring up in the direction of taking the form of a Boston Tea Party.

Conservative Governments over the past 10 years have known that this issue has been festering, but while they accepted the need to make adjustments in Scotland, which led to the devolving of the Crown Estate through the Scotland Act 2016, the situation in Wales was left to fester. This situation has been strenuously criticised by the Labour Government in the Senedd. I will not repeat the lengthy quotation which I presented to the House at Second Reading, when I drew attention to the words of the then Labour Climate Change Minister, Julie James, who, in a nutshell, said that the Crown Estate in Wales should be devolved, as in Scotland, and that the current situation is “outrageous”. Both the former First Minister, Mark Drakeford, and our erstwhile colleague, the current First Minister, the noble Baroness, Lady Morgan of Ely, have also called for the Crown Estate to be devolved in Wales.

In moving the first amendment, we are offering the Committee, and indeed the new Labour Government, an opportunity to take a small step towards redressing the balance. This does not provide for the full devolution of the Crown Estate in Wales, but it gives the Welsh Government a veto grip over the Crown Estate by way of the words which appear in the amendment:

“The functions of the Crown Estate in Wales may not be exercised without the consent of the Welsh Government”.


The mechanisms for granting that consent—indeed, for pinpointing the issues that would need to be addressed to secure that consent—can be open to negotiation between the Welsh Government and the Crown Estate. What this does is to establish beyond doubt that our Government in Wales will have the final word on such matters.

I will briefly mention Amendment 23, standing in my name and supported by the noble Baronesses, Lady Smith of Llanfaes and Lady Humphreys, and by the noble and learned Lord, Lord Thomas of Cwmgiedd. It also provides a mechanism, short of devolving the full Crown Estate to Wales, to require the Crown Estate to pass to the Welsh Government all the net profit that it has generated from Wales; and thereby to enable the Welsh Government to pass an appropriate part of such funds to the local authorities that I mentioned to ensure that they are not out of pocket from the bills that they have to pay to the Crown Estate.

The Labour Government at Westminster should be delighted to facilitate developments provided by the amendment, which I have highlighted. If they are not, they will need to make a very persuasive case because, if these modest proposals are not acceptable, the only answer might be for the devolution—lock, stock and barrel—of the Crown Estate in Wales to Wales, as has been the case in Scotland. I welcome support for these proposals from all quarters of the Committee and I await the Minister’s response with fascination. I beg to move.

[Lord Hain (Lab)]

My Lords, I support Amendment 21 in the name of the noble Baroness, Lady Smith. I do so as a former Labour Secretary of State for Wales who was responsible for the 2006 devolution Act. Before that, as a Welsh Minister, I, alongside the noble Lord, Lord Wigley, and others, was closely involved in winning the 1997 referendum, which brought in the 1998 devolution Act to establish the Welsh Assembly, now Senedd. I have also lived in Wales for 34 years now.

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. The Crown Estate is devolved in Scotland; surely there is no reason why the same powers should not be devolved to Wales, especially by a new Westminster Labour Government committed to partnership rather than confrontation with the devolved Administrations. That was the essence of the Prime Minister’s message to the special summit of the nations and regions last Friday, and in visiting Scotland, Wales and Northern Ireland in July within days of moving into Downing Street.

The Independent Commission on the Constitutional Future of Wales recommended that the Crown Estate be devolved, and Welsh Labour is committed to working with UK Labour in government to implement the recommendations from that commission.

Taking control of the management of Crown Estate assets in Wales would allow the Welsh Government greater autonomy over the speed and direction of the development of Welsh-sited Crown Estate property. The Welsh Government would have the opportunity to better align the management of Crown assets in Wales with the needs of Welsh citizens. The management of Crown assets also generates significant revenue to the UK Exchequer. Devolution of the Crown Estate would better align revenues from Wales with the income available for the Welsh Government to deliver on their priorities for Welsh citizens.

Marine planning is a holistic, statutory process for managing the UK’s seas including the seabed. Aligning Welsh marine planning with seabed leasing rounds for new developments, such as renewable energy, would help to ensure joined-up and plan-led decision-making.

Currently, there are stand-alone leasing rounds for certain types of activity, such as offshore wind or marine aggregates extraction. These leasing rounds, which occur from time to time, take account of relevant government policy, but devolution of the Crown Estate to Scotland has allowed a reshaping of the process, whereby the marine planning process sets the overall policy direction with leasing rounds only progressed after it has set national strategic policy. This ensures that marine management is better joined up and delivered. Taking control of the management of the seabed would allow Welsh Government Ministers both to better implement their policy decisions and priorities for the marine area and to ensure that all relevant interests can be reflected in a way that is simply not as possible with a top-heavy, centralised and London-centric agenda.

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[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I am very grateful to all noble Lords who have spoken in this debate in response to the amendments from the noble Lords, Lord Wigley and Lord Hain, and the noble Baronesses, Lady Smith and Lady Humphreys. I hope to be able to explain the Government’s rationale for retaining the existing structure of the Crown Estate.

First, let me set out how the Crown Estate currently operates and why the Government believe this remains the best approach. The Crown Estate Act 1961 requires the Crown Estate commissioners to manage the Crown Estate as a commercial enterprise to enhance long-term value and generate profit and to do so with due regard to the requirements of good management. A key purpose of the 1961 Act was to repeal various detailed statutory provisions that had built up over 150 years previously which were hampering the effective management of the estate. By focusing the commissioners’ duties on enhancing the estate’s value and the returns generated, the commissioners have a clear objective for which they can be held to account.

While the Crown Estate has goals which under its own strategy align with wider national policy objectives, the 1961 Act provides the Crown Estate with independence and autonomy to set and achieve its goals. The Government believe that the Crown Estate should continue to operate in this way, as a commercial business independent from government, because it has shown itself to be a trusted and successful organisation, with a proven track record in effective management.

The Crown Estate is multibillion-pound public corporation, which is required to pay its profits into the UK Consolidated Fund each year, worth more than £4 billion over the past decade. Those revenues are then allocated to public service priorities by the Government, subject to the usual parliamentary controls. That is a valuable outcome, which we need to be careful not to undermine.

I turn to the amendments that deal with devolving the Crown Estate in Wales. I fully recognise that there are now two Labour Governments in the UK. While I believe that there is greater benefit for the people of Wales and the wider United Kingdom in retaining the Crown Estate’s current form, I shall of course continue to discuss these issues with the First Minister and the Secretary of State for Wales to ensure that Wales sees the full benefits of the Crown Estate and other forms of investment.

In response to the arguments made by noble Lords during this debate, I make a number of points. First, devolving the Crown Estate to Wales would most likely require the creation of a new entity to take on the role of the Crown Estate in Wales. This by definition would not benefit from the Crown Estate’s current substantial capability, capital and systems abilities. As my noble friend Lord Hain and the noble and learned Lord, Lord Thomas, referred to, this would indeed further fragment the UK energy market by adding an additional entity and, as a consequence, it would risk damaging international investor confidence in UK renewables and disrupting the National Energy System Operator’s grid connectivity reform, which is taking a whole-systems approach to the planning of generation and network infrastructure. That reform aims to create a more efficient system and reduce the waiting times for generation projects to connect to the grid. The cumulative impact of these effects would likely delay the pathway to net zero by decades.

Furthermore, the Crown Estate’s marine investments are currently made on a portfolio-wide basis across England and Wales. To devolve to Wales would disrupt these existing investments, since they would need to be restructured to accommodate a Welsh-specific entity. Let me give two examples. The first is the Crown Estate’s £50 million supply chain accelerator, which will match-fund early stage projects related to offshore wind leasing round 5, and the £50 million investment in the offshore wind evidence and change programme, which brings together government bodies, the industry and key stakeholders from across the UK to better understand environmental impacts of offshore wind.

[Lord Wigley (PC)]

The Minister has explained the need for a restructure. As Scotland has devolution of this dimension already, clearly it is not impossible for people to come together after devolution for Wales, too.

[Lord Livermore (Lab)]

I shall go on to address some of those points further in my speech.

To devolve the Crown Estate at this time would also risk jeopardising the existing pipeline of offshore wind development in the Celtic Sea planned into the 2030s. The Crown Estate’s offshore wind leasing round 5 is spread across the English and Welsh administrative boundaries in the Celtic Sea. It was launched in February this year and is expected to contribute 4.5 gigawatts of total energy capacity, or enough to power 4 million homes. In addition to energy, the extensive jobs and supply-chain requirements of round 5 will also likely deliver significant benefits for Wales and the wider UK. Lumen, an advisory firm to the Crown Estate, has estimated that manufacturing, transporting and assembling the wind farms could potentially create around 5,300 jobs and create a £1.4 billion boost for the UK economy.

As I have said, devolution would also delay UK-wide grid connectivity reform. The Crown Estate is using its data and expertise as managers of the seabed to feed into the National Energy System Operator’s new strategic spatial energy plan. For Wales, the Crown Estate is working in partnership with the energy system operator to ensure that its current pipeline of Welsh projects, the biggest of which is the round 5 offshore wind opportunity in the Celtic Sea, can benefit from this co-ordinated approach to grid connectivity up front. 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.

Secondly, the Crown Estate’s assets and interests in Wales, as compared to its assets in England, are of a fundamentally smaller magnitude, which would very likely not be commercially viable if the costs were unsupported by the wider Crown Estate portfolio. The Crown Estate, in its present form, has the ability to take a longer-term approach to its investments and spread the costs of those investments across its entire portfolio. A self-contained, single entity in Wales would not have the same ability, nor would it benefit from the expertise that the Crown Estate has developed over decades in delivering offshore wind at scale. A devolved entity would be starting from scratch, midway through a multimillion-pound commercial tendering process, at a time when the Crown Estate is undertaking critical investment in the UK’s path towards net zero.

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[Lord Livermore (Lab)]

I am very happy to reiterate what I said: I will, of course, discuss these issues with the First Minister and the Secretary of State for Wales to ensure that Wales sees the full benefits of the Crown Estate and other forms of investment.

[Lord Wigley (PC)]

I am sure that the noble Lord, Lord Hain, listened to that response, as I did, with some amusement. If the line that the Minister is going to take in discussion with Welsh Ministers, who have very strong opinions on this matter, is the line that he has taken in responding to this debate, there is quite clearly not going to be a meeting of minds. We are talking about a Labour Government in Cardiff and a Labour Government in London, and this is going to be the backdrop to the politics that are running through the next few years, including the run-up to the 2026 election. I beseech the Minister to think more carefully about the way he is handling this.

The way in which the Crown Estate has been devolved in Scotland has not caused immense difficulties. They have been able to disaggregate the things that need to be disaggregated. It has been possible for the Scottish Government to get the benefits they need. The most important thing that I regard as coming from this sort of structural change is to give the Welsh Government the levers and powers—and the encouragement—to take initiatives themselves, to maximise the economic return that they can get in Wales and thereby to generate the income we need to run our government services. We do not want to be for ever and a day coming with cap in hand to the Treasury in Whitehall, begging for money.

On that point, perhaps it was the same noble Lord, Lord Macpherson, who was at the Treasury in 2010-11, when the Welsh Government had aggregated £400 million from money they had not spent on a revenue basis, in order to have a capital fund to build hospitals and schools, and the Treasury took back the whole £400 million. Being careful how they spent money at year end was a policy that the Labour Government in Wales could be proud of, but that is what the Treasury did to us. The Treasury is still, with the same game, trying to stop us taking initiatives on our own behalf to sort out our own problems.

I was grateful to the noble Lord, Lord Hain, who made a persuasive argument, and I hope we return to these matters on Report. I was naturally grateful to my noble friend Baroness Smith of Llanfaes—she will possibly come in on other debates on these matters. I realise where the noble Lord, Lord Macpherson, comes from on these issues. I too had a financial background; I was a financial controller in manufacturing industry and I know the responsibilities that go with finance. I also know the need to have the incentive and inducement to create the money that can then be used for the social services and all the other responsibilities of government —that is what we want to trigger and encourage in Wales.

I was grateful to the noble Baroness, Lady Humphreys, for her substantial speech, which laid out her party’s view. I am glad to see that the Labour Party in the Senedd Cymru, the Liberal Democrats and Plaid Cymru stand together on this, and, indeed, a number of Conservatives there do too, which perhaps Conservative colleagues could bear in mind.

The noble and learned Lord, Lord Thomas of Cwmgiedd, excellently summed up the whole thing. The problem that we have had down the years when it has come to wanting to take responsibility for doing things for ourselves rather than always going cap in hand to others to bail us out is that we are told we cannot do it, or that it will cut across the unity or the way the commercial sector sees it, et cetera. We have got to be able to stand on our own two feet, whether it is in the context of the structures of government we have now or different ones. As in the case of Scotland, we want to stand on our two feet and be able to pay our way in the world, and at least take responsibility on our own shoulders for doing that.

I take the point about Northern Ireland made by the noble Baroness, Lady Ritchie of Downpatrick, and, indeed, Northern Ireland is mentioned in some of these amendments. There is, of course, a need for a co-ordinated approach, but that does not mean that we have all to be lumped together under one overarching structure. The whole point of devolution is to give power and responsibility to those who are best placed to make the most of it, and, in this context, to develop and use our own resources. The noble Lord, Lord Berkeley, mentioned the situation in Cornwall, where there are resources that can be used and maximised for, I hope, the benefit of the people of Cornwall rather than for profits to be syphoned off elsewhere. The noble and learned Lord, Lord Thomas, mentioned our experience with coal, where we were left with the coal tips, industrial disease and all the environmental problems to clear up at our own cost, but when we try to do something about it, we are told we are not capable of doing so. Quite frankly, that is not acceptable.

I thank the noble Baroness, Lady Kramer, for painting her party’s viewpoint on a UK basis so clearly. Obviously, the response from the noble Baroness, Lady Vere, is not one I identify with; I am not entirely surprised as we have had such responses from Conservative Governments for many years. I am, however, surprised at the response from the Labour Front Bench, where we would have hoped for more.

There is currently a shortfall in the Welsh budget of some £250 million a year, which the Government are going to have to find. There is also an increasing dynamic to that figure: it will reach some £750 million by 2028. We want to be able to do something about it ourselves, so why do they not give us the tools we need to do the job when we are willing to take the responsibility to do it? I beseech the Labour Government to look at this again between now and Report. As the noble Lord, Lord Hain, suggested, they should speak to colleagues in Cardiff and try to get a solution that enables us to do more to help ourselves, rather than telling us for ever and a day to come with a begging bowl and hope that somebody will bail us out. I beg leave to withdraw my amendment.

Amendment 1 withdrawn.

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There is a risk associated with Clause (3)(1) and best consideration: that it might prevent the Crown Estate from fulfilling what it might regard as its core objective, which is to secure the maintenance and enhancement of the value of the estate but with the requirements of good management. In this context, good management embraces many of the issues that no doubt we will discuss in other amendments. We will probably not amend the Bill because putting them into the statute will be onerous, but we want to be assured that the Crown Estate, by virtue of Section 1 of the 1961 Act, has all the powers—and they are not just implied, because the Minister makes it clear that it actually has the powers—to do these things, meet these obligations and secure these objectives, and that Clause (3)(1) will not prevent it from doing so.

[Lord Wigley (PC)]

Before I pursue the subject of the amendment, I am glad to follow the noble Lord, Lord Lansley, on that subject. I suggest that, if the Crown Estate has the powers, it also has the responsibilities that go with it. The noble Lord, Lord Young of Cookham, has highlighted some important responsibilities, and I suspect that it will need a lot more attention in coming months and years.

I shall speak primarily once again on issues relating to the devolved dimension. It is to better understand the financial dealings of the Crown Estate in Wales that Amendment 24 in my name and that of the noble Baronesses, Lady Smith and Lady Humphreys, is on the Marshalled List. It asks for the disaggregation of the annual reporting of capital and revenue items to provide transparency in regard to the Crown Estate finances relating to Wales, England and Northern Ireland respectively. We have gone through some of the general arguments in this sphere, so I am not going to repeat them, but I stress that this is a modest proposal that surely cannot be rejected by any Government who have some sympathy with the position of the devolved Government.

[Baroness Humphreys (LD)]

I shall make a short contribution in agreement with Amendment 22 in the name of the noble Baroness, Lady Smith of Llanfaes, and Amendment 24 in the name of the noble Lord, Lord Wigley.

When I was preparing for this debate, I looked at some figures, but they are very difficult to find. On the first group in Committee, I referred to the fact that we know that the Crown Estate has land worth more than £600 million in Wales, that it owns 65% of the coast and that it has 300,000 acres of land in Wales, but we do not know exactly how much money that raises in Wales. We know that, across England, Wales and Northern Ireland, profits have more than doubled in the past year, growing from £443 million in 2022-23 to £1.1 billion in 2023-24, but there is very little clarity about the contribution of each individual nation to the total. In the interests of transparency, I certainly support Amendment 24. On Amendment 22, I cannot understand why none of the Parliaments of the UK sends a representative to sit on the board of the commission. I support those two amendments.