Crown Estate Bill [HL]

Debate between Baroness Vere of Norbiton and Lord Howard of Rising

Report stage
Tuesday 5th November 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, I thank my noble friend Lord Howard of Rising for his support on the amendment and for his very wise counsel in our discussions to ensure that the change that is proposed is both reasonable and rational. The Official Opposition have made a clear and consistent argument for the insertion of essentially two things: parliamentary approval to borrow up to 25% of net debt to asset value, and a second and simple check from the Government of the day when the borrowing is forecast to increase over that higher ratio.

This two-step process is quite important. The initial use of the power would ensure that Parliament and your Lordships’ House can take into account a revised business case. I am incredibly grateful to the Minister for publishing a business case that sets out the rationale as to why the Crown Estate needs this borrowing. Unfortunately, it does not include the partnership with GB Energy. Noble Lords will know that this partnership was announced with great fanfare, and one must assume that it is significant. Therefore, I believe it would be appropriate for the business case to be revised in due course and that that would be expected. I am sure that the Minister will agree that that will happen. However, on the basis of that business case, I think it is important that Parliament and your Lordships’ House can then say that it is wise for the Crown Estate to seek the borrowing required.

The second use of the power—which according to current forecasts, which I am sure the Minister would probably agree with, will not be needed for many years—to go beyond 25% of net debt to asset value based on the current total assets of the Crown Estate would mean going above a borrowing requirement of about £3 billion. That is a significant amount of money, and the Crown Estate is not forecasting that it will need that amount of borrowing, so the further use is for much further down the road. In terms of the initial use, our view is that it is appropriate to put that check in place now to ensure that all information is considered as the Crown Estate is given this new power to take on borrowing.

I am grateful to the Minister for his engagement to date on this important matter. I know he has had some useful conversations with myself and my noble friend Lord Howard of Rising. Underpinning all of this and many of the amendments before your Lordships’ House today is that the assets held by the Crown Estate are absolutely critical to the national, cultural and environmental importance of our nation. Not only are the assets incredibly important, but the Exchequer receives a very handy income from the Crown Estate, which then supports the nation’s public services. We must not put either of those things at risk unduly.

I believe that some form of parliamentary oversight is critical here. It is right that, under this Bill, there is a lessening of that oversight, as Parliament, particularly the House of Commons, will no longer need to approve the salaries and expenses of the commissioners of the Crown Estate. Given that reduction in parliamentary oversight, ensuring the correct financial structure of the Crown Estate is, to my mind, critical. Doing that on the basis of the new business case is also incredibly important.

This is a simple amendment. It is in two stages: one would have to happen quite soon, and one would happen many years hence, but I think it is right that we not only address the financial situation of the Crown Estate as it is now, following the partnership with GB Energy, but ensure that the Crown Estate does not risk the temptations of excessive borrowing in the future, which would therefore put our nation’s assets at risk. I hope noble Lords will be able to support the amendment.

[Lord Howard of Rising (Con)]

My Lords, I support my noble friend. In Committee, the Minister was good enough to agree that controls on borrowing by the Crown Estate must be in place and that they would be set out in a memorandum of understanding between the Crown Estate and the Treasury at a loan-to-value ratio not to exceed 25%. This figure is more than I would have wished for, and using asset value rather than capital reserves in the definition allows a still greater level of borrowing. Nevertheless, I am grateful that the Minister acknowledges that there should be a limit on borrowing. However, there must be a tighter control than a memorandum of understanding. Amendment 1 proposes an affirmative statutory instrument to achieve this. It requires the Government to limit borrowing to net debt-to-asset value of no more than 25%, purposely copying the wording of the Minister’s comment in Committee.

Should His Majesty’s Government need more flexibility in the future, this statutory instrument would provide for that. It would be better if the limit on borrowing were in primary legislation, but in seeking a solution which His Majesty’s Government might find acceptable, the amendment would be a fair compromise, retaining any flexibility that the Government might need while providing a stronger safeguard than a memorandum of understanding. As the Minister said, this limit is unlikely to be of concern to the present Government. Therefore, I hope he will accept this very modest suggestion to safeguard the Crown Estate for the future.