Crown Estate Bill [HL]

Baroness Humphreys Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Lord Macpherson of Earl’s Court (CB)]

My Lords, unusually, as a former Treasury official, I am generally in favour of greater devolution—the more so when the likes of the noble Lords, Lord Hain and Lord Wigley, and my noble and learned friend Lord Thomas support a proposal. But on this occasion I fear I should advocate a degree of caution.

I speak having been in the Treasury when the Crown Estate in Scotland was devolved. With hindsight, I think that was a mistake, particularly because there is considerable benefit in looking at offshore wind policy at a UK level. Indeed, the then Government missed a trick. They should have followed the example of I think the Wilson Government in the 1960s, who hived off oil sea exploration from the Crown Estate. The then coalition Government should have hived off offshore wind from the Crown Estate, not least because it gives the Royal Family, who no doubt are a deserving cause, a massive windfall, as my noble friend Lord Turnbull pointed out at Second Reading.

Although I very much understand the case that noble Lords have made on both sides of the House, I think this is something that should not be rushed. There may be a case for devolving further powers to Wales, not least because there is a case for giving Wales similar treatment to Scotland. But if the Government are sympathetic to this amendment, I encourage them to spend a bit more time working through whether there are unintended consequences and, in particular, looking through the financial implications. One thing I would not want to see happen is Wales being disadvantaged financially by devolution. This might be the right thing to do for the longer term, but I encourage the Minister to think twice before agreeing to it today.

[Baroness Humphreys (LD)]

My Lords, I apologise to your Lordships for not having taken part in the Second Reading debate. I also draw your Lordships’ attention to my registered interests and my membership of the board of Community and Voluntary Support Conwy, CVSC.

I rise to speak to Amendment 26 in my name and Amendments 1, 21 and 23 in the names of the noble Lord, Lord Wigley, and the noble Baroness, Lady Smith of Llanfaes. My Amendment 26 calls for the devolution of the Crown Estate’s powers to Wales and would require the Treasury to devolve Welsh functions of the Crown Estate commissioners to Welsh Ministers or a person nominated by Welsh Ministers.

There are increasing calls within Wales for the devolution of these powers. It is a policy of my party, the Welsh Liberal Democrats, having been debated and agreed in our Welsh conference in 2023. It would ensure that the profit from offshore energy lease agreements stays in Wales.

In July 2023, Senedd Members voted by a majority of 35 to 13 in favour of a Plaid Cymru debate calling for the devolution of the Crown Estate to the Welsh Government. As we have heard, there are similar calls at local government level. Last week, as the noble Lord, Lord Wigley, detailed, councillors in Gwynedd Council debated a motion asking their chief executive to open negotiations with the Crown Estate over “access fees”. The council paid its annual fee of £161,000 to the Crown Estate in 2023 to allow public access to beaches in Gwynedd, of which £144,000 was paid to allow access to Hafan Pwllheli marina. Councillors also believed that responsibility for the Crown Estate should be devolved to the Welsh Government, with their motion stating:

“Any profits generated by the Crown Estate, here on Welsh lands and waters, should remain in Wales, for the benefit of our residents and communities”.


In addition to all this, social media videos provide information about the Crown Estate and explain why the promoters want change, leading to greater awareness of the issue among the public.

The Crown Estate owns land estimated to be worth more than £600 million in Wales. This includes 65% of the coast of Wales and 300,000 acres of land, including any gold and silver on it. Profits on these numbers are unclear, however.

Let me be clear: there is no criticism of the Crown Estate commissioners implicit in this amendment. The commissioners operate within a system that was established 63 years ago but with a history going back to 1760, and they cannot diverge from the status quo without an Act of Parliament similar to that which devolved similar powers to Scotland in 2017. So, while the commissioners operate the system from the 1960s, history for us in Wales has moved on. Devolution has opened the eyes of the people in Wales to the opportunities and responsibilities that the new order has brought.

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[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.

[Baroness Kramer (LD)]

My Lords, I very much endorse the comments of my noble friend Lady Humphreys. I too believe that this is another opportunity to make sure that there is a far stronger voice for Wales, so let us seize it and use that as a template for how the Crown Estate goes forward.

I wanted to focus more on a couple of other issues. In a sense, I see a linkage between the comments made by my noble friend Lord Russell suggesting that, by forgoing receiving lease income and instead taking an ownership tranche in a whole series of new energy projects, the long-term income to the Crown Estate and to England and Wales would be significantly larger than the much shallower and shorter-term benefit of charging lease rent. That relates to the same kind of issue raised by the noble Lord, Lord Young of Cookham. Please could the Minister sort that problem out? This really is an unfair situation, and it will just take a Minister to absolutely slap his hand on the table and get it done.

In both cases there is a tendency, which I noticed at Second Reading, for Members of this House to think of the Crown Estate as some sort of cuddly organisation. It may be very generous, and if you read its annual report you can see that it does wonderful things for local communities and talks incredibly sympathetically about disadvantaged people, but when it operates as a commercial entity, my goodness, it is one of the most aggressive commercial entities that anyone could run into—and when you say that within the property sector, you are really saying something. It is infected by the same position adopted by many other property companies, which is to go for very short-term profit and to forget about the long term.

Everything that we hear from the Government is about patient capital—and, if you are going to look for the long term, surely you follow the pattern proposed by my noble friend Lord Russell, which says that, over the long term, you will do much better if you take some serious equity positions and perhaps make an in-kind contribution to a project, rather than charging rent over a relatively short-term period. If it acts in the same way as a commercial entity, surely in its commercial activities the Crown Estate should be treated as a commercial entity and therefore have to live up to the law that applies to other commercial entities operating in that same sector, and not to have an out because of its peculiar status, sitting somewhere between public and private. If that were done, the noble Lord, Lord Young, would not be asking why on earth it was not living up to the terms of the law for other commercial entities in dealing with leaseholders and freehold. It has to be recognised for what it is, and there are changes, consequently, that the Government may wish to make—first to create long-term thinking but also to make sure that, when it operates on a commercial basis, it is subject to the same regulations and requirements as other similar commercial properties.

I want to address very briefly the issues raised by the noble Baroness, Lady Vere. It is wonderful the change that comes when a body moves into opposition —the road to Damascus. The number of times I have asked a Conservative Government: when we have appointments, could we please have pre-appointment scrutiny by a committee of this House? In fact, I may even have requested them of the noble Baroness, Lady Vere, concerning various appointments at the Treasury—I cannot quite remember, there have been so many over the years. I am so glad of this Damascene conversion. We now have a Conservative party that is also supporting pre-appointment scrutiny. I do believe that pre-appointment scrutiny was often the Labour Party position. The noble Lord, Lord Livermore, is shaking his head but I think I may have a longer memory. I have certainly heard it from other Members, both on the Treasury Select Committee when I was in the other House, and on the Economic Affairs Committee. Pre-appointment scrutiny does make sense as a general underlying principle, and it would seem to make sense for the four new commissioners that are to be added to the existing eight.

Like others, I am really curious to know: going from eight to 12, they say, is good practice, but why? What will they do? Where will they come from? I can perfectly well see that this is a great opportunity for regional representation, and the noble Lord, Lord Holmes, touched on a very important point: we now look at most boards and want to see clearly that they understand that the ethics and attitudes of today require inclusivity; that it is not just some token item somewhere in an ethics statement by the company, but that someone is actually taking responsibility, based on knowledge, at a very senior level within the decision-making structure, and implementing that role. Here is an opportunity to seize that, and I hope very much that the Government will do so.

Crown Estate Bill [HL]

Baroness Humphreys Excerpts

Report stage
Tuesday 5th November 2024 Lords Chamber

Moved by

[Baroness Humphreys]

6: After Clause 2, insert the following new Clause—
“Devolution of Crown Estate management to WalesAfter section 1 of the Crown Estate Act 1961, insert—“1A Devolution of Crown Estate management to WalesThe Treasury must complete a transfer of the responsibility of the management of the Crown Estate in Wales to the Welsh Government.””Member's explanatory statement
This amendment would require the Government to devolve Welsh Crown Estate responsibility to Wales.

[Baroness Humphreys (LD)]

My Lords, I will speak to Amendment 6 in my name and Amendment 11 in the name of the noble Lord, Lord Hain. I thank the noble Baroness, Lady Smith of Llanfaes, for signing my amendment. We debated a similar amendment in Committee, where those of us who argued for the devolution of the Crown Estate to Wales made strong arguments in favour of it. Other noble Lords, including the noble Lord, Lord Wigley, and the noble Baroness, also presented strong cases for their amendments on the transference of the management of the Crown Estate in Wales to the Welsh Government, on separate reporting within the annual accounts of the activities of the Crown Estate in England, Wales and Northern Ireland, and on other issues. I thank both noble Lords for their commitment to this issue.

Public opinion in Wales is behind the devolution of the Crown Estate, with a YouGov poll last year showing that 58% of the people of Wales support such a move. Senedd Cymru has supported its devolution, as have the majority of political parties in Wales, including my party—the Welsh Liberal Democrats and our federal party. I was encouraged this week to find that, in their response to the final report of the Independent Commission on the Constitutional Future of Wales, the Welsh Labour Government said:

“Our longstanding position is that the Crown Estate should be devolved to Wales in line with the position in Scotland”.


That being so, I am disappointed that the Welsh Government were not consulted when this Bill was being prepared.

There are frustrations in Wales, as Scotland is seen to be benefiting from the devolution of Crown Estate powers to the Scottish Parliament, not only through the receipts paid to it but in the control, power and influence that Scotland has over the use of its resources. Scotland appears to move on while Wales lags behind. For us, the process of devolution appears to have come to a stop. There are real concerns that, by the time Wales has control over the Crown Estate, much of the wealth will already have been extracted.

As we appear to have reached something of an impasse, the way forward might be to follow the process followed by the Scottish Affairs Committee in the other place in the lead-up to the devolution of the Crown Estate there. It published a number of reports, one of which in 2014 identified issues in the management of the Crown Estate’s responsibility, particularly in relation to the seabed and foreshore. It looked at issues including

“accountability and transparency … communication and consultation with local communities … cash leakage from local economies … arising from the way the CEC operates … The evidence did not identify such problems with the CEC’s management of its urban and rural estate”,

only those relating to the seabed and foreshore.

We would therefore welcome any decision of the Welsh Affairs Committee to initiate an inquiry to determine if similar problems apply to Wales. It is not of course our place in this Chamber to call for that, but an evidence-taking committee of inquiry would provide the evidence to move this issue forward and address any lessons learned since the devolution of the Crown Estate to Scotland.

As I said in Committee, my amendment does not call for a timescale for the devolution of the Crown Estate to the Welsh Government, because I accept that this will not be completed overnight. However, I am also disappointed that the amendment of the noble Lord, Lord Hain, which the Minister has signed, does not lay any foundation or route map for the transference of powers to Wales. Because of this, I am minded to seek the opinion of the House on my Amendment 6.

I want to make a couple of comments on Amendment 11, but as the noble Lord has not had the opportunity to speak to his amendment yet, my comments will be brief. I am grateful to the noble Lord for tabling his amendment and recognise the time and the cross-party work he put into its preparation—I know it was no easy feat. I am also grateful to the Minister, who has signed Amendment 11. This represents a major change in his stance since Second Reading and Committee of the Bill, and I also acknowledge how difficult this process must have been for him as Treasury Minister.

However, this major change in the Minister’s stance will be seen as the smallest, most insignificant step for those advocating the devolution of the Crown Estate to Wales. Amendment 11 calls for three commissioners to be appointed, one each to represent England, Wales and Northern Ireland and to be

“responsible for giving advice about”

their respective nations.

I have two questions, which I hope the noble Lord or the Minister will be able to address. First, proposed sub-paragraph (3C) refers to

“the giving of advice to the Commissioners about conditions in that part so far as relating to their functions in relation to land there”.

I assume that the use of the word “land” excludes the giving of advice about the more lucrative foreshore and seabed. If it does exclude the foreshore and the seabed, why are they not included?

Secondly, in a nod to devolution, in sub-paragraph (4B) Welsh Ministers are to be “consulted” about the commissioner for Wales before the recommendation is made to His Majesty. Can the Minister confirm that “consulted” means that Welsh Ministers are to take no part in the actual appointment of the commissioner for Wales?

I am seeking more for Wales than Amendment 11 provides. With the devolution of the Crown Estate, we could see an economic boost built on the success of renewable projects around our coastline, reviving coastal communities and ensuring the benefits from these projects are actually felt by those living near them in Wales. I beg to move.

[Lord Murphy of Torfaen (Lab)]

My Lords, I will speak to move Amendment 11 on behalf of my noble friend Lord Hain, who cannot be with us this afternoon. I was present in Committee on the Bill and listened with great interest to noble Lords discussing the issue of devolving the Crown Estate to Wales. I had a great deal of sympathy with the points that were made. I believe it is incongruous that it has already been devolved to Scotland but is not devolved to Wales or Northern Ireland. I speak as someone who was Secretary of State for both Wales and Northern Ireland. Therefore, I welcome the amendment tabled by my noble friend, in so far that it means that there will be commissioners specifically responsible for giving advice to the Crown Estate itself on behalf of Wales and Northern Ireland—which is very good.

I take the point made by the noble Baroness, Lady Humphreys, about consultation, but it is pretty clear to me that it would be a very foolish Government to appoint commissioners who were not approved by the First Minister in Cardiff and the First and Deputy First Ministers in Belfast. It is a start, though it is not exactly everything that was wanted. I agree with the noble Baroness, Lady Humphreys, that my noble friend the Financial Secretary has indeed moved his stance to one which would be agreed to by lots of people in Wales, and I guess in Northern Ireland.

We are living in different times; we now have a Labour Government in Cardiff and in Whitehall. I believe it is important that Governments can get together and talk about these issues in a very special way. That is why this amendment is before us this afternoon: exactly because there have been proper discussions, which I guess the Secretary of State for Wales has also been involved in. Personally, I do not think it goes far enough, but as I said, it is a start.

In the new regime—in this new Britain since the general election—there is a very serious case to be made for a much better relationship between the devolved Administrations and the United Kingdom Government. We have a new Council of the Nations and Regions, which will do a great deal of good for that relationship. We have a situation in Northern Ireland where we now have the Executive up and running, at last, and I congratulate the previous Government on the work they did on that. In this new era, where devolution means something very different from what it has meant over the last number of years, we have to believe that this new relationship will result in decisions such as this one.

I hope that this is not the end of the discussions between the Treasury, the Government, the Welsh Government and the Northern Ireland Executive; I hope it is the beginning of discussions on these issues, not just on this one, but on other ones as well. In my personal view, I hope that, ultimately, the Crown Estate should be devolved. However, we are where we are: the Government have made a concession, the Financial Secretary has very kindly signed my noble friend’s amendment, and I very much look forward to what he has to say in the course of this important debate.

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[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 my noble friend Lord Hain and the noble Baroness, Lady Humphreys.

Turning first to Amendment 11, tabled by my noble friend Lord Hain with my noble friend Lord Murphy speaking on his behalf, I thank my noble friend Lord Hain for his constructive engagement on this topic and thank other noble Lords across the House who have spoken in favour of this amendment, which the Government support. The amendment requires that the board of Crown Estate commissioners must include a commissioner who is knowledgeable about Wales and that such a commissioner, alongside their existing responsibilities, must be responsible for giving advice about Wales to the board. It also requires equivalent positions for Northern Ireland and England and grants Welsh Ministers and the Executive Office in Northern Ireland the right to be consulted about the Welsh and Northern Irish appointments. These legislative requirements will ensure that the board of commissioners continue working in the best interests of Wales and Northern Ireland alongside their existing duties as commissioners. To answer the noble Baroness, Lady Humphreys, I say that I do not believe that the amendment in any way deliberately excludes the seabed.

I reassure the noble Lord, Lord Wigley, that the Crown Estate absolutely welcomes the opportunity presented by the increase in the number of commissioners from eight to 12, to bring knowledge of the devolved nations even more directly to the board table. It is an enthusiastic supporter of this amendment. This will supplement the expertise of its director for the devolved nations, who is based in the Crown Estate’s recently opened Cardiff office and whose knowledge and extensive local engagement over the last two years is evidence of the importance to which it attaches understanding local conditions in Wales.

The commissioner responsible for giving advice to the board on Northern Ireland will provide valuable insight as the Crown Estate’s engagement and activities in Northern Ireland continue to evolve. For example, the Crown Estate’s chief executive was in Belfast last month meeting officials and Ministers from the Department of Agriculture, Environment and Rural Affairs and the Department for the Economy. That form of engagement will move from strength to strength with the knowledge that such commissioners will offer to the board. These commissioners will certainly strengthen the Crown Estate’s ability and mission to deliver benefit for the whole UK at a time when devolution of the estate would significantly risk fragmenting the energy market, which would undermine international investor confidence and delay the progress towards net zero by an estimated 10 to 20 years, to the detriment of the whole UK.

Amendment 6, tabled by the noble Baroness, Lady Humphreys, would require the Treasury to complete a transfer of the responsibility for the management of the Crown Estate in Wales to the Welsh Government. As I have set out previously, the Government’s position is that there is greater benefit for the people of Wales and the wider United Kingdom in retaining the Crown Estate’s current form. As I set out in detail in Committee, the Crown Estate Act 1961 requires the Crown Estate commissioners to manage the Crown Estate as a commercial enterprise and with due regard to the requirements of good management. 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. It has shown itself over the last 60 years to be a trusted and successful organisation with a proven track record in effective management.

The Crown Estate is required to place profits into the UK Consolidated Fund each year, worth more than £4 billion over the past decade. This enables those revenues to fund UK government spending in reserved areas in Wales and Northern Ireland and supports the funding provided through the block grant. Those revenues are then allocated to public service priorities by the Government, subject to the usual parliamentary controls. As I have noted previously, that is a valuable outcome which we must be careful not to undermine. Devolving the Crown Estate to Wales would, as I have explained, most likely require the creation of a new entity to take on the role of the Crown Estate in Wales. As I have previously set out, this entity would not benefit from the Crown Estate’s current substantial capability or capital and system abilities, nor benefit from the Crown Estate’s marine investments currently being 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.

I will not repeat the examples that I gave in Committee, but it remains the point that to devolve at this time would risk jeopardising the existing pipeline of offshore wind development in the Celtic Sea, planned into the 2030s, and the vital investment and jobs that this would bring across south Wales. As I noted in Committee, in addition to energy, the extensive jobs and supply chain requirements of the round 5 offshore wind opportunity in the Celtic Sea would also likely deliver significant benefits for Wales and the wider UK. As I mentioned in Committee, an advisory firm to the Crown Estate estimated that manufacturing, transporting and assembling the wind farms could create around 5,300 jobs and a £1.4 billion boost for the UK economy.

Devolution would also delay UK-wide grid connectivity reform. 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 round 5—which is expected to contribute enough energy capacity to power 4 million homes across the United Kingdom—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. A devolved entity would be starting from scratch midway through a multi-million-pound commercial tendering process when the Crown Estate is undertaking critical investment in the UK’s path towards net zero. I therefore respectfully ask the noble Baroness, Lady Humphreys, to withdraw her amendment.

[Baroness Humphreys (LD)]

I thank the Minister for those comments and everyone who has spoken in this debate, especially those who have supported the devolution of the Crown Estate to Wales. I was looking for a little more from the Minister about the responsibility of the commissioners. It seems that they are there to give advice, but there is no responsibility to report to Welsh Ministers or to discuss with them, which I hope that they will do in any case.