Crown Estate Bill [HL]

Baroness Kramer Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Baroness Kramer (LD)]

My Lords, that was an innovative speech at the end of a long day—so thank you to the noble Lord, Lord Rooker. I thank the Minister and officials for the engagement with me and others last week, which was exceedingly useful.

The Crown Estates, as we have heard very clearly today, are a unique animal sponsored by Treasury; they are completely operationally independent, sitting between the public and private realm, undertaking a vast range of activities in pursuit of a set of objectives which, as the noble Earl, Lord Devon, said, are essentially very benign. In that context, like the noble Lord, Lord Liddle, after my first brief glance at the Bill I thought that it was rather insignificant. It was only on a second look that I realised that this represents a very consequential expansion of the powers of the Crown Estate, first to run down its very extensive cash reserves and then to move into borrowing. In principle, we as a party have no objection to that expansion, given the stated beneficial objectives that the Crown Estate has, including sustainable growth, zero carbon, energy security and community development. But today we have heard a very wide range of issues raised, and those issues need to be addressed.

Much of the debate today focused on issues ranging across the environment and I thank my noble friends Lord Russell and Lord Teverson for speaking from my party’s perspective, which means that I do not have to repeat all that. But so many others spoke today, including the noble Baroness, Lady Hayman, speaking for Peers for the Planet, the noble Baronesses, Lady Young of Scone and Lady Bennett, the noble Lord, Lord Liddle, and the noble Baroness, Lady Ritchie. There was a whole series of speeches that underscored that, within this scope, there is a great deal of tension between the development of renewable energy and new opportunities for energy, the natural world and biodiversity and regional issues. There is a great deal of choice and issue based on the expanded role that the Crown Estates see themselves playing.

What I do not understand—and I speak now with more of a Treasury and business hat on—is why there is no business case to accompany this request for such a large expansion of power and investment capacity, as well as borrowing capacity. Should it go wrong, you can be quite sure that the borrowing will have consequences in restricting other activities that the Crown Estates actually carry out, or falling back on the public purse either directly or indirectly through the National Loans Fund. Why is no business case sitting behind this to provide us with detail, direction and explanation and tease out and answer some of those very obvious tensions? It is bad practice. I say that to the Minister because that message has to go back to the Crown Estates and sit in the back of the minds of government as they go forward over the next several years and bring issues like this forward to us.

As I say, when I looked at the Bill, I decided that the best thing to do was to focus on the nitty-gritty within it. My heart went out to the noble Lord, Lord Young of Cookham, in dealing with the issues of freehold negotiation with the Crown Estate—the noble Earl, Lord Devon, raised some of those issues in a very extended context. Frankly, this is an aggressive commercial organisation. Over the years, I have dealt with many people who have held leases from the Crown Estate as freeholders, and they are extremely difficult and complex negotiations. That there seems to be no accountability and that aspects of the law do not necessarily apply are among the issues that have to be addressed as we offer the Crown Estate a much more expanded role and much more expanded powers.

I want also to pick up the issue raised by the noble Lord, Lord Liddle—or maybe it was the noble Lord, Lord Berkeley—that with this expanded range of powers, adding four seats to the board creates a real opportunity to bring in some additional resource and expertise, but again, we do not have a discussion of that. What kind of expertise is it? What are they looking to use those additional roles for? What kind of additional capacity is it? Once again, I think this is bad practice and it should come before the House.

On the sovereign grant, raised initially by the noble Lord, Lord Turnbull, but picked up by others, I have to say that it is not an area of expertise of mine, but it certainly seems to be an opportunity to separate out a real idiosyncrasy and to recognise the Crown Estate in the new, modern role it is going to play rather than trying to run a sort of pretence that it is some sort of self-funding operation for the monarch.

When I looked at the business case—and we are talking about an operation that has over £1 billion in revenues, £14 billion in property and £15 billion in total assets, so it has enormous capacity to do such things as develop a business case and look into the future—I could pick up almost nothing from the existing annual report. Nowhere in that annual report did there seem to be to be a sense of, “We wish to do this, but we can’t”, or “We need additional resource to achieve this, but it isn’t there”. We must have this additional information fed back.

As noble Lords will gather from looking at the Bill and the notes attached to it, the Crown Estate framework agreement between the Crown Estate and the Treasury sits outside the Bill but actually governs the capacity at present for the Crown Estate to raise funds and to spend. I think that even the Treasury would admit—in fact, I know it would—that the framework agreement as it sits today is not fit for purpose. It is written from the perspective that the Crown Estate is not permitted to borrow, so it provides it with a workaround that, in essence, lets it borrow indirectly by creating vehicles with various partners, typically in the private sector. Through those joint ventures it is, in effect, at present able to borrow, and the amount that it can borrow is limited, both by vehicle and in aggregate, under Clause 22. As we provide the additional powers, Clause 22 becomes completely irrelevant. My question to the Minister is: where is the revised framework agreement? If we are saying that it is urgent that these powers are passed, it is therefore surely urgent that we have the framework agreement in hand, and if not the finalised framework agreement, then surely at least a draft version of either the framework agreement or an MoU between the Crown Estate and the Treasury on what this will look like. As many people have said, we cannot allow this to be a body that has completely unlimited borrowing powers, unconstrained by shareholders or by other kinds of clauses or constraints, or unconstrained by bank agreements. We are going to have to have a framework agreement and I really will push the Treasury on this, because I think that, in principle, that kind of work needs to be done in time and brought to Parliament. Parliament should not be asked to sign off powers blind when information can and should be provided.

Almost finally, I want to comment on the Crown Estate in Wales. My party is a very strong believer in devolution of the Crown Estate in Wales to Wales, so that the proceeds are then used for Wales. I am very taken, I must say, by the proposal of my noble friend Lord Teverson for regional wealth funds to be a mechanism to make sure that in regional areas where the Crown Estate is at play in England those funds flow back into the local community, where the Crown Estate will increasingly operate.

We shall not oppose this legislation, but we can see areas where it is weak and where there is weak practice. I hope that the Government will address those issues. The underlying principle of using the Crown Estate and its assets effectively to achieve our goals in renewable energy and in the environment is obviously one that we support.