Crown Estate Bill [HL]

Earl Russell Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Earl Russell (LD)]

My Lords, there is much to welcome in this Bill. We welcome Labour’s mission to decarbonise power generation by 2030. While we are supportive, we will closely scrutinise these proposals to ensure they work and provide value. We will encourage Labour to be bolder. The partnership between the Crown Estate and GB Energy is key. GB Energy will be a state-owned energy company sitting at the heart of Labour’s plans to decarbonise our power generation. Backed by £8.3 billion of government investment over this Parliament, the aim of GB Energy will be to leverage some £60 billion of private investment—a state-owned investment vehicle working alongside the private sector.

The Government will take on some of the risk and provide much-needed stability in policy. This will help to accelerate private investment, speeding up the transition to cleaner energy, ensuring energy security and lowering energy bills over time. It is good for the environment, for jobs and growth, and for lower energy bills, potentially saving each household £300 a year, if all works well.

A typical household’s annual energy bill will rise by 10% from October. This is necessary because of higher international energy prices, which is a stark reminder of the impact of our continued dependence on imported gas. Ambition is good, but are the financial resources provided adequate? Labour has decided to cut its own green budget: £23.7 billion for green policies over this Parliament is far less than the £28 billion a year that Labour had originally planned. We call on Labour to reconsider.

This partnership brings together the Crown Estate’s experience of delivering renewable projects, especially offshore wind, with new investment powers. It is hoped that 20 to 30 gigawatts of offshore wind will reach seabed lease stage by 2030. This partnership makes sense and the Conservatives had similar plans.

The Crown Estate owns the seabed and has the experience. The UK has the world’s third-best wind resources and we should make use of them. The Crown Estate in England, Wales and Northern Ireland is a multibillion-pound business managed by the Crown Estate commissioners. In Scotland, the Crown Estate is managed by Crown Estate Scotland, since the Scottish estate was devolved in 2017. The Crown Estate is one of the largest property managers in the United Kingdom, administering property worth some £15.6 billion, including more than half the UK’s foreshore and virtually its entire seabed to the limit of 12 nautical miles.

The Bill seeks to amend the Crown Estate Act 1961 to enable the Crown Estate to continue to fulfil its core duty of maintaining and enhancing the value of the Crown Estate and the return obtained from it, while maintaining the Crown Estate as an estate in land. The Act will continue to be the main legislation governing the Crown Estate.

The Bill broadens the Crown Estate’s investment powers and confers a wider power to borrow, subject to Treasury consent. It also makes some changes to the governance of the Crown Estate, in line with modern best practice.

The Bill authorises the Treasury to lend to the Crown Estates commissioners from the National Loans Fund and to provide financial assistance to the commissioners from money provided by Parliament. The Explanatory Notes say that

“the government does not anticipate The Crown Estate borrowing in the short-term. Any borrowing will either be from, or subject to the consent of, the Treasury”.

This question is in my speech, but the Minister has already answered on the definition of “short-term”. I think he said 10 years or so. How much money do the Government anticipate might be borrowed before 2030? What oversight will Parliament have of this borrowing process?

The Explanatory Notes also say that:

“Further details on the arrangements for lending from government to The Crown Estate will be set out in an updated Framework Document”.


Why is this framework document not ready and why are we being asked to approve the Bill without it?

This Bill has only three clauses. I ask the Minister why the decision was taken to present two separate Bills to Parliament. While GB Energy talks of partnerships, this is the only one that has been announced and it appears to be key to GB Energy. Having two separate Bills makes the job of scrutiny harder. Was this about limiting the scope of both Bills or are there other, practical reasons for it?

The Conservatives have left the building. The last Prime Minister decided to play political games with environmental policy. The UK did not gain any additional energy security and bill payers are now paying the price.

The Conservatives have criticised the Bill and the cost, but they would do well to remember the £22 billion black hole that they left behind. Dither, delay and pointless climate culture wars mean that UK energy bills were £22 billion higher over the past decade than they would have been had action been taken earlier. Precious time and inward investment were sacrificed.

The Government need to make sure that GB Energy has the finances to succeed. With a five-year timetable to set up GB Energy, will energy bill payers see the reductions promised before the next election? What actions are being taken to ensure that these plans are not reversed by subsequent Governments?

Why not make GB Energy an energy supplier? The Government are taking a lot of financial risk for little long-term reward. We admit that this helps to leverage investment, but where is the extra long-term benefit if the state does not own or supply anything at the end? Have the Government considered allowing the Crown Estate to waive the licensing fees in exchange for part ownership of the infrastructure? This would provide a continued source of revenue.

The concerns and questions we have relating to this Bill centre on the parliamentary and financial scrutiny. The next offshore wind auction round must succeed after the complete failure in 2023. If it all goes wrong, whose fault will it be? The Crown Estate has all the skills and experience, but how will Parliament know whether the Government are listening to its concerns and taking them seriously?

The UK Government say that they are in discussions with the Scottish Government and Crown Estate Scotland on how GB Energy could help to support new development and investment within Scotland. There are also calls from Wales for similar devolved powers and financial benefits. The Government reply that the more times the overall pie is sliced, the fewer benefits there are for anyone. Perhaps a greater concentration on small community energy projects and increased local benefits offer a way forward? Enabling work and community energy should be at the heart of these plans. The devolution issue feels problematic in this Bill.

Bringing benefits to energy bill payers early in the process is essential to success. Ed Davey has said that the withdrawal of the winter fuel payment is Labour’s first mistake. This decision should be reversed, as it will increase fuel poverty. Worse, it sends entirely the wrong message about the future of energy bills at the start of the energy transition.

Are these the only two clauses in the original 1961 Act that need updating? Surely with new powers should come some updated responsibilities. The Scottish Crown Estate Act 2019 provides that the estate must act in a way that is likely to further sustainable development in Scotland, as well as contribute to the promotion or improvement of regeneration, social well-being and economic well-being. Why does this Bill not contain anything similar?

A lack of national grid capacity and investment is also a major stumbling block. There is absolutely no point in creating lots of new renewable energy if it cannot be connected to the grid or it takes years to do so. I welcome the letter dated 29 August from the Secretary of State for Energy Security and Net Zero to ESO, asking for independent advice on the pathway going forward, but this is not a solution; it is simply a request for advice. I encourage the Government to remove zombie projects to help speed up the connections.

We welcome the intentions to strengthen the Crown Estate’s ability to develop spatial strategies. Our seabed needs to fulfil many competing functions while maintaining marine environments. Work must be co-ordinated across government. We welcome floating offshore wind, but more work is needed to mature and develop other renewable energy sources.

Finally, misinformation and disinformation are very much part of the environmental space. I wonder whether the link between the Crown Estate’s profits and the process of calculating the amount of the sovereign grant is a continued hostage to fortune and whether it might be worth considering some alternative process.

Crown Estate Bill [HL]

Earl Russell Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

Moved by

[Earl Russell]

2: Clause 1, page 1, line 17, after “loans” insert “of no more than £150 million”
Member’s explanatory statement
This amendment would place a cap on the amount the Commissioners may borrow.

[Earl Russell (LD)]

My Lords, in moving Amendment 2 I will speak also to Amendment 5. Together, they seek to place a cap of £150 million on the amount of money that Crown Estate commissioners may borrow. To be clear, we broadly welcome and support the measures proposed in the Bill. My amendments do not change the purpose of the Bill; they are simply about the need for parliamentary oversight and scrutiny over the new borrowing powers and how they will be exercised in practice.

As the Bill stands, there is no cap on the amount the Crown Estate may borrow, subject only to Treasury approval and being within the fiscal rules. To quote the Minister at Second Reading,

“any borrowing by the Crown Estate will be at commercial rates, for subsidy control reasons, and be subject to Treasury consent. Values will be based on the total gross audited asset value of the enterprise, as reported in the annual report and accounts”.—[Official Report, 2/9/24; col. 1024.]

I struggle to think of any other examples of this kind of arrangement, where Parliament gives permanent rights for borrowing subject only to Treasury approval. If the Bill passes as it stands, there will be no further parliamentary oversight or review of these powers. There are, in effect, no limits on the amount that can be borrowed in either cash terms or as a percentage of holdings.

While employing different methods, my amendments and the others in this group all have a similar purpose: balancing the competing objectives with applying some overall financial oversight, while not being so restrictive as to be burdensome to the work of the Crown Estate and our common objective of reaching net zero.

Since borrowing powers lie at the heart of the Bill, it would be remiss of us not to examine fully their purpose, extent, impact and further oversight. We welcome the key partnership with Great British Energy, which was announced at the same time that GB Energy was launched. We welcome the plan to gain greater investment and make better use of the Crown Estate’s lands to generate new sustainable energy projects. We support the aims of updating the Crown Estate Act 1961 so that the Crown Estate can make best use of its cash reserves, subject to Treasury approval. Much has changed since the original Act was passed, and it makes sense to update the borrowing provisions in it.

The Crown Estate is a commercial business set up by the 1961 Act. It is independent of government and managed by commissioners who operate to secure profits that are returned to the Treasury for the benefit of the nation. To grow and to help it play a more useful role in our path to achieving net zero, the Crown Estate should have broader powers to borrow and to invest, so that it is best able to prosper, to compete in a commercial marketplace and to make best use of the assets under its control. The restrictions under the 1961 Act have created an unhelpful situation, where the Crown Estate, in the past, has been forced to sell our national assets to generate capital for investment. This is not a situation we wish to see continue.

--- Later in debate ---

I hope that these explanations have been helpful and that I have provided some clarity on the points raised. I hope that, as a result, the noble Baroness, Lady Vere, the noble Lords, Lord Howard and Lord Holmes, and the noble Earl, Lord Russell, feel able not to press their amendments.

[Earl Russell (LD)]

My Lords, I thank everybody who has spoken on this group of amendments. It has been a useful and helpful discussion from us all. There was a feeling from all parties across the Committee that there was a need for some movement on these issues, and I thank the Minister for listening to the will of the Committee and responding so positively. I thank the noble Lord, Lord Macpherson. It is an interesting idea to review the borrowing limits, which could be published. I also thank the noble Lord, Lord Howard of Rising, for his amendment proposing that borrowing should not exceed 10%, and the noble Baroness, Lady Vere, for her amendments.

The Minister has really listened. The important thing we have here is a commitment from the Minister to publish the memorandum of understanding and the business case before Report. That information will be helpful to Members from all parties in making decisions about what they want to do, so I thank him greatly for that. He also said very clearly that his understanding is that the loan-to-value rate should not be more than 25%, which would be a sum equivalent to £3 billion of the total £15 billion of value within the Crown Estate. We have some things to go away and think about.

I heard what the Minister said about the Government’s position. His view is that there should not be a value that exists in statute. That is something that we probably all need to go away and think about to move it forward, but I thank him for the concessions that he has made. Providing that information will help Members of this House to make their decisions, so I thank him very much.

Amendment 2 withdrawn.

--- Later in debate ---

Amendment 19 is about the people who are impacted by the Crown Estate land, those who butt up against it, and who are on Crown Estate land and properties. They are the stakeholders. It seems to me that, again, this Bill offers the opportunity to completely reimagine that relationship between the Crown Estate and its stakeholders for the benefit of both. These are the people who understand the issues at the sharp end. As part of their daily experience, they come across the highs and lows of working the land and the ocean or being in the energy field. Crucially, they see where the difficulties and shortcomings are. I suggest to the Minister that, with modern technology, there is potential to engage with all these stakeholders in a completely reimagined fashion in real time if so required. This would really transform that relationship, drive greater benefits for both parties and completely change the sense of how those on the land and in the properties connect to the Crown Estate. I look forward to the Minister’s response.

[Earl Russell (LD)]

My Lords, I will speak to my Amendment 31. I apologise in advance that I have no “Monty Python” sketch references, but I support the amendments from the noble Lord, Lord Young, and the other amendments already spoken to.

Amendment 31 seeks to give an explicit power to Crown Estate commissioners to lease parts of their holding in exchange for either part or full ownership of any project or development, as the commissioners see fit. For the sake of clarity, the full wording of the proposed new Section 3(1)(a) of the Crown Estate Act 1961 is:

“The Commissioners may waive lease fees in exchange for full or part ownership of any project or development”.


I say this only as the Member’s explanatory statement used the word “land”. My amendment is intended to—and does, as far as I am concerned—cover all the Crown Estate’s holdings. That is particularly important because, as we all know, most of its money comes from the leases of the seabed. This amendment is designed to help the Government and the partnership with GB Energy. It is designed to help the Crown Estate itself. I want to see a transition to net-zero power by 2030. I welcome that commitment from this Government.

But I also want to see us grow and develop as an economy and as a country. I want the energy transition, which is arguably one of the greatest transitions in our use of energy since the Industrial Revolution, to be of benefit to ordinary people. I want the UK to be able to own at least parts of our new energy infrastructure—the energy infrastructure of the future. That is my thinking in my amendment. I want the UK to receive long-term benefits above and beyond just the green and environmental benefits that come with these things.

The Crown Estate generates its income primarily from the lease of seabed plots for offshore wind and floating offshore wind developments. The Crown Estate reported record profits for 2023-24 of £1.1 billion, boosted by round 4 sales. Round 5 of the offshore wind auction was not as successful but we have just had a successful round 6, which I welcome, which generated some 4.9 gigawatts of capacity but at somewhat lower prices than in round 4. Labour has plans to generate 20 to 30 gigawatts of offshore wind capacity by 2030. For context, that is enough to power 20 million homes.

We still have quite a long way to go with this offshore wind and floating offshore wind transition in particular. The hope is that £8.3 billion of investment by the Government will help to leverage some £60 billion of private investment. It is interesting that we are talking about this today, the day on which the Labour Government are holding their investment summit. I wish them well with that because the UK economy needs to grow and we need inward investment to do that.

We welcome, obviously, the plans for GB Energy and this partnership and tie-up with the Crown Estate. But although I very much welcome Labour’s ambition to decarbonise our power generation by 2030, it is worth noting that GB Energy will not be an energy supplier or own any energy generation assets. To my mind, that is a missed opportunity and I think we could do better.

To quote the Labour Energy Forum document title, Who Owns the Wind, Owns the Future. The Floating Offshore Wind Task Force has predicted that floating offshore wind could be the UK’s biggest industrial success by 2030, worth £47 billion to the UK economy and employing some 10,000 people. We should never lose sight of the fact that the UK is well placed and is estimated to be the third-best country in the world for the generation of wind energy. We are extremely lucky in that regard.

Other significant parts of the Bill seek to make rights that were implicit in the 1961 Act explicit. From my reading of the original Act, I can see no reason why the Crown Estate could not waive lease fees in exchange for part-ownership of offshore or floating offshore energy wind projects—but, at the same time, I can find no implicit right in the original Act. Frankly, I think there should be an implicit right.

As far as I can tell, the Crown Estate does not own or part-own any offshore wind installations now. It has a helpful page on its website that shows who owns all the offshore wind under its control. In many cases it is foreign Governments, hedge funds and other nations and their capital which own it. In 2022, for example, nearly half the UK’s offshore wind capacity was owned by state-owned or majority state-owned foreign companies. They are getting the long-term benefit of the investment in our third-best wind energy in the world and are using it to support their economies.

I want our wind energy to generate and support our economy. While leasing plots brings in revenues, part-ownership of the infrastructure itself could bring in much-needed longer-term and consistent revenue streams to the Crown Estate. I believe there is greater long-term financial gain from part-ownership of energy infrastructure than from simply leasing the seabed.

This would be good for the Crown Estate. As we have heard today, the Crown Estate is in a period of transition and allowing it the ability to explore this, if it wants to, would be useful at the start of the partnership. I also believe that allowing this to happen could be useful for the generation of small-scale community energy projects. This is something that I believe in strongly and would like to see the Government do a lot more of, and this amendment would be useful in helping that to happen. It could be the basis of a new model for the way the Crown Estate works, generating much smaller, local community benefit projects.

This would be good for energy transition, good for the Crown Estate, good for the UK economy and good for jobs and growth. I welcome your Lordships’ responses and look forward to hearing from the Minister. I hope that this amendment finds approval.

[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.

--- Later in debate ---

[Earl Russell (LD)]

My Lords, I rise to speak to my Amendments 29 and 30 in this group. I thank the noble Lord, Lord Teverson, for the powerful points he has made, particularly around our 2030 commitment, and I have co-signed his Amendment 28. I also thank the noble Baronesses, Lady Hayman and Lady Young of Old Scone; I very much support Amendment 25 and nearly all the amendments in this group. Adding environmental protections to the Bill is a key element of our work.

My Amendment 29 would require the commissioners to carry out their duties under subsection (3) with regard to sustainable development, economic development, regeneration, social well-being and environmental well-being. We welcome the plans to update the borrowing and investment powers of the Crown Estate, but we strongly feel that new and greater roles should come with updated responsibilities. The Crown Estate sits in a unique space and position. The land assets are owned by the Crown and managed by the Crown Estate and its commissioners, and they are mandated by Parliament to deliver a profit for the Treasury. The Crown Estate, in effect, floats in a unique position: it manages its land holding and assets, which really belong to the nation, but it is managed as a sub-department of the Treasury, away from much parliamentary scrutiny.

The year 1961 was a long time ago; we lived in a very different world then, as has been said. Our understanding of the environment and the need for nature protection was far less developed, as was any sense of facing an acute environmental and nature crisis. The Bill, as the Government have drafted it, is far too narrow; that is why all these amendments have been tabled. I understand the need for expediency and for the Government to put in the two clauses to amend the borrowing powers so that we can get on with GB Energy. That is all fine, but you cannot revisit a 1961 Act and expect to solely put in two clauses without updating all the other aspects of life and the world that have developed since.

My Amendment 29 shamelessly and purposely copies the text from the Scottish Crown Estate Act 2019, as I believe that these provisions are a useful precedent in our deliberation of these matters here today. When the Scottish Parliament considered many of the exact same matters that we are looking at, its conclusion was that these updated powers were useful, necessary and a helpful update to the powers contained in the original Crown Estate Act 1961. Further, they were agreed and enacted by that Parliament, and have been in force for over five years now. Unless the Minister wants to contradict me, my understanding is that, since they were passed, these new powers have not had any undue impacts on the ability of the Scottish Crown Estate to conduct its business free of undue regulation or burden. The devolution question has already been discussed, but my thinking in tabling this amendment was that I felt, in updating responsibilities, that there was value in seeking to ensure the same duties and responsibilities applied to all the devolved aspects of the Crown Estate’s land in Great Britain, and I felt that this was useful for the Crown Estate’s ability to operate and not be burdensome.

My Amendment 30 places a nature recovery duty on the Crown Estate. The amendment defines a nature recovery duty as including

“taking steps to … embed nature into spatial planning and seabed leasing … allocate space for nature recovery in all projects, and … invest in clean energy projects”.

I thank the Wildlife and Countryside Link for its briefing on the Bill, and its recommendation that this amendment should be included. I recognise and support the critical role that the Crown Estate has in the delivery of offshore wind generation and the role that the Bill has to enhance this going forward, but we really need to decarbonise our power generation, fight climate change and protect nature. However, in updating the 1961 Act, the Bill represents a missed opportunity to ensure that the Crown Estate also has a requirement to support the Government’s obligations towards achieving the nature targets under the Environment Act 2021.

All public bodies in the UK are presently not required to consider the environmental costs and benefits of their decisions and investments, as there is no statutory requirement for them to do so. I support the Private Member’s Bill from the noble Lord, Lord Krebs, and will speak when we debate it on Friday; if it is passed, we will not have to amend every Bill one at a time as there will be a cross-cutting duty, so I encourage the Government to look at that Private Member’s Bill and support it.

This duty is particularly important to the Crown Estate due to the very large area of its land and sea holdings and the fact that many of its sites are extremely ecologically sensitive. It is worth reiterating that the Crown Estate has 200,000 acres of land, 12,000 kilometres of coastline and a total seabed area bigger than the combined landmass of England, Wales and Northern Ireland. The Crown Estate owns more land than the entire landmass of Luxembourg and is the third-largest landowner in the UK. The land under the Crown Estate is vast, diverse and of high ecological importance.

The marine land, and the seabed in particular, are important as blue carbon stores, as we heard from the noble Lord, Lord Teverson. Equally important are the foreshore, coastline and many other precious ecological sites. I want to publicly recognise that the Crown Estate has existing governance structures and strong policy objectives in place to try to ensure that environmental impacts are a central consideration in its investment decisions. I also note that the Crown Estate has recently committed to embed nature throughout its policy-making process. It has begun consultation on the specific nature recovery strategy, but I understand that this final document is yet to be released. My amendment is not a criticism of its stewardship role; it is an attempt to support the existing duty but place it on a statutory footing. My amendment supports and builds on the work that the Crown Estate is already doing, which proves to me that the preparatory work is already being done to ensure that this amendment would work in practice.

I feel it is essential that this work is given a statutory basis, and that is exactly what my amendment seeks to do. It is essential that the Crown Estate makes an active contribution to meeting environmental nature recovery targets and contributes to climate mitigation and adaption targets. For this to happen, my belief is that a binding target is required.

[Baroness Kramer (LD)]

My Lords, I will just make two very quick comments. First, there has been a clear message to the Minister that, in one way or another, this Committee feels strongly that we should have in statute an expression of the climate change, environmental and nature issues. That should not be seen as a criticism of the Crown Estate as it is today but simply says that this is so important that the Crown Estate should not be given the freedom to change its mind on those issues without the intervention of Parliament.

I do not want to put the Minister on the spot, but my second brief issue concerns a previous answer, when there may have been some confusion between the memorandum of understanding and the framework agreement. I do not ask him to do this now, but could he go back and look at those two rather different things, as we need to approach them both differently? That would be exceedingly helpful, but I do not want to put him on the spot at this moment.

Crown Estate Bill [HL]

Earl Russell Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Lord Bellingham (Con)]

My Lords, I want to add a couple of very quick points. The noble Lord moved that amendment with great clarity and put a strong argument. The angle which I am coming from is the county where I live and which contains the constituency that I once represented, North West Norfolk. Norfolk is host to a number of onshore installations related to the offshore wind industry. Indeed, off the Norfolk and Lincolnshire coasts a number of arrays generate a huge amount of offshore electricity. However, Norfolk is seeing the construction of a very large substation, another having already been completed. As a result of that substation, there will be the need to connect to the grid. That will entail the need for transmission. At the moment, it is going to be along pylons. There is a big debate about the possibility of putting it underground but, in any event, there will be a major infrastructure project.

The idea of these regional wealth funds makes huge sense. The community is obviously the recipient of renewable energy infrastructure that can have great benefits to local communities in terms of electricity and can also have an impact on the local environment. I am thinking particularly of the substations and pylons. Could there be a way to link what the noble Lord has suggested with the original fund to some amelioration of the impact on those communities? Perhaps the Minister can comment on that.

[Earl Russell (LD)]

My Lords, I will speak to my Amendment 33 and in favour of Amendment 27 tabled by my noble friend Lord Teverson.

My noble friend laid out Amendment 27 very well. A good positive communication strategy is missing entirely from this Government’s conversation on the energy transition. It is extremely important not only that we meet our climate targets but that we take the public with us and that they see the benefits of that transition. As I said earlier, in energy terms it is the biggest transition since the Industrial Revolution. It will impact bill payers and people’s lives. If they see the environment as something not related to them and see the consequences of the energy transition only as something that costs them money and inconvenience, it will be difficult to bring them with us on this journey that we need to do together.

The Liberal Democrats have always believed in community and community benefit. It is extremely important that the Government work very hard to bring down cost to bill payers as early as possible in the transition. That is why I was so worried about the withdrawal of the winter fuel payment. On a separate note, I say that it sent entirely the wrong message at the start of this Government and this process of taking people with them. I encourage the Government to reconsider that.

On the subject of community energy and community benefit, my noble friend Lord Teverson raises a really interesting point about offshore wind. This is obviously a probing amendment. We know that there are links with onshore wind, but I would be really interested to hear from the Minister whether there is scope and whether the Government are listening and are aware and prepared to look at these things in the round over time. They are really important. This is about showing that we are in this together, that the energy transition is for everybody, and that the energy transition brings benefits to local communities—particularly those impacted by overhead pylons, substations, offshore cables coming to shore or because they are near to offshore wind facilities. I encourage the Minister to consider all those points. I hope that he will give us a favourable answer and look at them over time.

My Amendment 33 is also, in a similar vein, a probing amendment, so I will not speak for long on it. It seeks to require the Crown Estate commissioners to direct a percentage of the Crown Estate’s profits, to be agreed by the Secretary of State, to a skills training fund. The fund would work to

“provide persons residing or employed on the boundaries of or on the land of the Crown Estate with skills training”.

The commissioners must

“consult with appropriate national and regional organisations and industry to agree the type of training that the fund will provide”.

Crown Estate Bill [HL]

Earl Russell Excerpts

Committee stage
Tuesday 22nd October 2024 Lords Chamber

Moved by

[Earl Russell]

32: After Clause 2, insert the following new Clause—
“Report on impact of this Act on the Sovereign GrantThe Secretary of State must, within one year of the passing of this Act and each subsequent year, lay before Parliament a report into the effect of this Act on the size of the Sovereign Grant.”Member’s explanatory statement
This amendment requires the Secretary of State to review the impact of this Act on the size of the Sovereign Grant.

[Earl Russell (LD)]

My Lords, this amendment would simply require the Secretary of State to review the impact of this Act on the size of the sovereign grant. I have tabled it as I feel that, as part of our consideration of the Crown Estate Bill, it is important to look at the direct link between the future planned growth of Crown Estate activities and the increase in profits that will result directly from the partnership with GB Energy, and the interlinked direct impact these changes will also have on the practical workings of the Sovereign Grant Act 2011.

The Sovereign Grant Act came into force on 1 April 2012 and changed the arrangements for funding Queen Elizabeth’s official duties. It consolidated four separate sources of funding into one new sovereign grant. The grant is intended to be a more permanent system than the previous one, which was reign specific. The sovereign grant is paid annually by His Majesty’s Treasury at a value indexed as a direct percentage of the revenues from the Crown Estate. It was initially set as an indexed percentage of 15%. The percentage is reviewed every five years by the royal trustees, made up of the Prime Minister, the Chancellor of the Exchequer and the Keeper of the Privy Purse. The level of the grant is protected by law from decreasing because of falling Crown Estate profits, as there were during the Covid pandemic. With annual accounts published by the Keeper of the Privy Purse and audited by the National Audit Office, the process promised to be more accountable. The level of the grant has risen in recent years to help fund, in part, a £369 million refurbishment of Buckingham Palace, which was approved by Parliament. After King Charles III’s accession to the Throne, the new King approved a statutory Order in Council to allow the existing sovereign grant provisions to continue throughout his reign.

This is all very well but, to come to the heart of the matter, my concern is the direct link between the profits that the Crown Estate makes and the calculation of the amount of the sovereign grant going forward. My request is that the direct link is discussed today, and I call on the Government to consider amending it. My amendment calling for an annual review was the closest wording I was able to table on this matter.

There is a world of difference between the direct binary link that we have now, where a set percentage of the Crown Estate’s revenues is used as the only calculation basis in determining the size of the sovereign grant, and the system that I would prefer, where the Government pay due regard to the Crown Estate’s revenues as part of the process of determining the size of the sovereign grant.

I have five areas of concern about the future of these arrangements after this Bill passes. First, my personal feeling is that the present calculation is somewhat obtuse and that the Sovereign Grant Act is not a particularly helpful or appropriate way of determining how, and at what level, we fund the Royal Family. The trouble with all this is that the attempt to link royal funding to the profits of the Crown Estate is a conjurer’s trick; it is an accounting sleight of hand. The two are not related at all. The Crown Estate’s profits are, and always have been, government funds.

I am not here to have a conversation about the role, purpose or future of the Royal Family; I am not anti-monarchy. Nor do I wish to discuss the appropriate levels of funding, as none of this is relevant to the Bill. Before us is a Bill that will see the Crown Estate allowed to borrow from the Treasury, subject to approval, and if all goes well this will result in rapid investment in, and growth at, the core of the Crown Estate’s business, that of leasing seabed plots for offshore floating and offshore wind developments. When the Crown Estate is at the heart of a rapid green energy revolution, and the sovereign grant is calculated as a percentage of revenue profits and reviewed only every five years, it is only sensible for us to take a moment to examine the potential impacts that this rapid growth will have on the calculation of the grant.

My second concern is that this rapid and exceptional period of Crown Estate growth was not foreseen when the 2011 grant Act was passed, and this makes future calculations more difficult.

Thirdly, I am worried that it may potentially put the King personally in a difficult position. Your Lordships should note that, in January 2023, the Keeper of the Privy Purse, speaking on behalf of the King, asked the Government to reduce the percentage used to calculate the sovereign grant so that the total did not include the income from new offshore wind leases, calculated to be worth £1 billion annually to the Crown Estate. The request was made by the King, out of his desire that the money described as a “windfall” could be best used for “wider public good” instead of funding the Royal Family during a cost of living crisis, which he had referred to only weeks earlier. In July last year, with further Crown Estate profits, the Government announced that the grant would be changed to 12% in the following year, down from 25%, while maintaining the same level payable.

It is my understanding that a further reduction is planned to come in through primary legislation following 2026-27. In the words of the Report of the Royal Trustees on the Sovereign Grant Review 2023,

“The Crown Estate’s Net Revenue Profits are expected to increase significantly in future years”.

The trustees’ projected figures show an increase from £442 million in 2022-23 to £1.05 billion in 2024-25. With predicted exceptional linear growth forecast for the foreseeable future, will we see newspaper headlines every year to the effect of “Exceptional growth in Crown Estate’s green energy brings huge profits to the King: the King kindly wishes that these are used for the public good”?

My fourth point is that the five-year review is inadequate in this period of exceptional continuous growth. I call on the Government to amend the 2011 Act to make the review annual.

My fifth and final point relates to what is a complex and confusing system that is not only poorly publicly understood but a hostage to fortune. The system is ripe for exploitation by those who are either against the energy transition, are supportive of the old energy architecture or simply wish to use the politicisation of the energy transition to spread disinformation and propaganda. This is my biggest worry. From the challenges to well-established basic climate science to deliberate attempts to undermine the transition to heat pumps and electric vehicles to miscalculations of costs, propaganda is, sadly, ever present. A system that can all too easily be used to link the green energy transition to extra funding to the Royal Family is ripe to be manipulated by those who wish to argue that the green transition will cost you more because all the benefits are funding the Royal Family. A highly effective government communications strategy that works in partnership, wins hearts and minds, extols the benefits and lower bills is essential to support the transition, and this link does not help with that.

The move to green energy and the financial support received by the Royal Family are uneasy bedfellows. I foresee this as an opportunity that will be exploited by those aimed against the transition. My humble opinion is that the calculation of the sovereign grant as a direct percentage of Crown Estate profits represents a weakness in the system that leaves us vulnerable to interference as we transition our power generation. My wish is simply that this Government consider amending the direct nature of this link and conduct an annual review of the sovereign grant during this period of rapid growth. My amendment is here simply to allow this conversation to take place. I look forward to hearing the opinion of your Lordships and the Minister’s response on these issues. I beg to move.

[Baroness Vere of Norbiton (Con)]

My Lords, I rise to speak briefly on this group. I note that the noble Lord, Lord Berkeley, is not in this place and so was unable to speak to his amendment. I understand why the noble Earl, Lord Russell, has tabled his amendment, and I am grateful to him for his exposition of the background to it. On these Benches, we recognise the unusual role that the Crown Estate has in the stewardship of the assets held in the right of the Crown. We recognise, too, that the revenues from the assets do not belong to the sovereign, nor is any part of them payable directly to the monarch.

The issue here is one of communication. It must be—it is absolutely essential—that there be no perception of any direct financial link between the sovereign and any amounts received under the sovereign grant and the amount of revenue generated by the Crown Estate. Upon the announcement of the partnership with GB Energy, there was a perception from some of the more excitable end of the media that the sovereign was somehow party to, and specifically approving of, the arrangement. I encourage the Minister and commissioners of the Crown Estate to ensure that information in the public domain about the operation of the Crown Estate, but also any further partnerships that may come down the track, cannot possibly suggest any direct involvement from the sovereign and, therefore, that there should be no undue benefit accrued.

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I hope these explanations have been helpful and that I have provided reassurance on these issues. I hope that, as a result, the noble Earl, Lord Russell, will feel able to withdraw his amendment.

[Earl Russell (LD)]

I thank the Minister for his comments. I appreciate that there is information of which the Government are aware from the reports that come to Parliament on this. Some of my questions might have been answered had I had sight of the business case, so I look forward to that being published.

The only slightly outstanding issue for me is about our communications strategy around the green revolution, making sure that the Government are communicating properly and taking the public with them. I still worry that there is a bit of confusion between us. I will withdraw my amendment and thank the Minister for his response, which I will go away and consider.

Amendment 32 withdrawn.

Crown Estate Bill [HL]

Earl Russell Excerpts

Report stage
Tuesday 5th November 2024 Lords Chamber

[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.

[Lord Livermore (Lab)]

My Lords, I thank all noble Lords for their contributions to this debate. First, I would like to address the points raised by the noble Lord, Lord Young of Cookham. I thank him very much for his engagement on this issue since Committee. I am also extremely grateful to him for raising the issues around the law relating to ownerless land and the process of escheat. It is a legally complex area and long overdue for reform. As a result of his intervention, Treasury officials are now engaging with the Law Commission on options for longer-term reform.

On the specific issues raised by the noble Lord, I am grateful to him for meeting with me, Treasury officials and the Crown Estate after Committee to discuss his specific concerns in detail. At the meeting we gained useful clarity that in cases of escheat the Crown Estate follows the valuation formula set out in the Leasehold Reform, Housing and Urban Development Act 1993, as he said.

As the noble Lord requested in Committee, I have agreed to update the framework document that governs the relationship between the Treasury and the Crown Estate to make this clear. The addition in paragraph 7.2 will set out that the commissioners have a responsibility to ensure that all public undertakings given on the Crown Estate’s behalf by Ministers in Parliament are met. I have raised the noble Lord’s suggestion about the specific accounting change with the Crown Estate and will follow up in due course.

Amendment 2, tabled by the noble Baroness, Lady Vere, would require scrutiny by the Treasury Select Committee, or any successor committee, of future chair appointments before the appointment can be made. She spoke persuasively on this in Committee, and I agree with many of the points she raised. For this reason, I am happy to confirm that the Treasury will work with the Cabinet Office to add the role of chair to the official pre-appointment scrutiny list. This will be in accordance with the already-established process by which significant roles, such as this, are added to the Cabinet Office’s pre-appointment scrutiny list. As I have set out, I will be very happy to update noble Lords in due course. The noble Earl, Lord Russell, asked when that will be. I will come back as soon as I have relevant information. We are already working with the Cabinet Office, and I do not envisage there being a significant delay.

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[The Earl of Kinnoull (CB)]

My Lords, I will speak to Amendment 5, which stands in my name. I thank the Minister and his Bill team for their time in what is always the busiest period of the Treasury’s life. He was happy to give time, and I am very grateful for that and for the sensible discussion that we had.

The amendment is designed to be the gentle pencil in the back, as I put it in Committee, in order that the Crown Estate Scotland be afforded the same freedoms and flexibilities that the Crown Estate will have following the passage of the Bill. I described in Committee how the Crown Estate Scotland had advised me that the Scottish Government were keen that it has those. I know that the UK Government are keen that it does so, as is the Crown Estate itself.

There are many opportunities for collaboration, particularly for energy projects in the North Sea at the moment, but there will be other opportunities as well for aquaculture. There is the ability to copy the good and avoid the bad, given that a number of copycat transactions might be done using Crown Estate property going forward. This is of course in all our interests, because ultimately this is very much part of the net-zero agenda, and the more the two Crown Estates can be aligned the better it will be for everybody in the long term.

The amendment is, as I said, a gentle pencil, designed to ensure that the UK entities do not down tools following the passage of this Act but carry on enthusiastically to ensure that Crown Estate Scotland benefits from the same freedoms and flexibilities. I therefore ask my only question of the Minister: does he share this aim of ensuring that those freedoms and flexibilities are afforded, and does he feel that this amendment is a proportionate way of going about it?

[Earl Russell (LD)]

My Lords, I rise to speak briefly to all the amendments in this group, all of which relate to reporting.

Beginning with government Amendment 3, I am grateful to the Minister for this important concession and welcome his listening to the concerns expressed across the House and his open engagement and willingness to look again at this issue. If he will forgive my saying so, we have come quite a long way since Second Reading, when the Government’s response was that the partnership with Great British Energy was not really a key part of the Crown Estate Bill. We support the clean energy mission—this is so important not only for our net-zero goals but in providing for our own energy security. Great British Energy promises to unlock £60 billion of private investment, and the Government themselves have committed £8.3 billion over the course of this Parliament. We have the third-best wind resources in the world, and we should be making best use of them to bring down the cost to bill payers and ensure that we have security of our own supply.

By 2030 this will, I hope, have led to the generation of enough electricity for the equivalent of 20 million homes. Everyone across the House has broadly welcomed this, but collectively we have wanted broader and greater scrutiny of the Crown Estate and the work it does. It is a long time since the 1961 Act came in, and simply updating the borrowing powers without updating any other measurements did not feel like the complete picture for providing that security going forward. We have campaigned for greater transparency and the Government have listened. I am grateful to them and welcome this.

We are happy to support Amendment 5, tabled by the noble Earl, Lord Kinnoull, but with one small caveat. It is very important that Crown Estate Scotland goes along with the energy transition and is fully invested. The noble Earl’s amendment is carefully worded, simply calling for a report to be laid before Parliament. Devolution is an important issue for us on these Benches: it is not for this Parliament to be telling devolved Parliaments what they should do or how they should act, although we recognise that the noble Earl’s amendment does not do that.

Equally, as I said, we support the amendment and would like to see progress made on this issue, just as we would like to see Scotland fully engaged with the Great British Energy partnership and contributing to our green energy. As the noble Earl said, the amendment is a pencil in the back. I have written down “a gentle nudge”, and they are probably similar things. We welcome the amendment, which puts down a marker to the Minister and the Government to continue their negotiations and conversations with their equivalents in the Scottish Assembly, the Scottish Government and Crown Estate Scotland so that progress can be made.

Finally, my Amendment 8 was tabled as a compromise, from my point of view. There has been a feeling around the House that we need greater scrutiny, and noble Lords have raised numerous issues that they feel should be subject to such scrutiny. The Minister responded by saying that under the original 1961 Act, too many legal powers were constraining the Crown Estate’s ability to act freely in the interests of the state. He consistently argued throughout the various stages of this Bill that he did not want to reimpose those conditions on the Crown Estate’s ability to operate. The idea behind my amendment is that, simply by putting chapter headings in the Crown Estate’s annual report, which goes before Parliament, there would be greater opportunity for the issues that have been raised collectively in this House to be scrutinised in Parliament, so that, in exchange for giving the Crown Estate greater borrowing powers and a greater role, there would also be greater scrutiny.

I have aimed to cover a lot of the issues that have been raised across your Lordships’ House. It is quite a simple amendment that simply asks for these topics to be covered. However, I doubt whether the Minister will respond positively to it.

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[Earl Peel (CB)]

My Lords, I welcome the amendment from the noble Lord, Lord Forsyth. For those of us who have followed these issues over the years, there is no doubt that the impact of no environmental assessments being undertaken on these salmon farms has been a devastating effect on wild salmon stocks. It is about time that we had a system in place where proper assessments were undertaken, so I thoroughly welcome this amendment.

I have a question for the noble Lord, Lord Forsyth. How does he think the assessment would be undertaken? Would it be done by the Crown Estate itself or undertaken by an independent assessor? I would be much happier if it was independent rather than being done in-house, but perhaps the noble Lord can enlighten us on how he feels that might develop.

[Earl Russell (LD)]

My Lords, I rise to speak briefly to this amendment, and I might have a slightly different take on it. To start with, the amendment requires the Crown Estate to assess the environmental impact and animal welfare standards of salmon farms on the Crown Estate. I thank the noble Lord, Lord Forsyth, for raising this issue and for the interest he has sparked in it across the House. His partnership with the noble Baroness, Lady Jones, is an unexpected one.

The noble Lord, in his personal conversations with me, as he has had with others, has spoken about his personal journey on these issues. He has gone from a time when he was in government and supported these farms to a time now when he recognises the damage that they do. I do not disagree with him at all on that. There is a real need to protect animals; there is a real need for animal welfare; there is a real need to look at the associated pollution and at the escape of farmed salmon and the impact on natural salmon that happens as a result of these farms. As far as all that goes, I have no problem with this amendment.

However, the issue here is that the Crown Estate is devolved in Scotland, so I have had to turn to the philosopher George Berkeley to try to analyse this amendment. He came up with the question: if a tree falls in the forest but nobody hears it, does it make a sound? My response to the noble Lord, Lord Forsyth, is: if his amendment protects no salmon, is it helping the salmon? There are literally no salmon farms in England. I have an assurance from the Minister personally that there is no intention from the Crown Estate to start producing salmon farms in English waters. In fact, I do not think those waters are able to support salmon. I do not think that is happening. I listened to the point made by the noble Earl, Lord Kinnoull, that we are legislating for the longer term—that is an issue —but, again, I see absolutely no plans for this to happen.

This matter is devolved. My strong suggestion to everybody in favour of stronger protection for salmon and the environment is to raise these matters with the Scottish Parliament, which is responsible for these matters. Noble Lords can put this in the Bill, but it will be overturned in the Commons. If not, it will have no impact on any salmon. I fail to see the point of this amendment.

On these Benches we are not able to support this amendment, not because we do not support animal welfare but because this simply does not impact any fish. There is no point in making bad, pointless legislation; that just makes us all look foolish. It does not do anything to increase animal welfare standards if the standards do not apply to any animals. It is pointless.

[Lord Roborough (Con)]

My Lords, I declare my interests in the register as an owner of fishing rights and president of South West Rivers Association. I will also speak briefly, as the arguments have been well made by many noble Lords.

We have heard from noble Lords around the House that this is an important amendment that strikes at the heart of our care for the environment and animal welfare. It imposes reasonable obligations on the Crown Estate to take responsibility for environmental damage caused by salmon farming on its property, and for the welfare of the fish being farmed. As I understand it, there is only one salmon farm in our waters, off the coast of Northern Ireland, although there are 210 in Scottish waters. But this amendment will ensure that any future salmon farms are developed with those obligations in place.

In Committee, the Minister highlighted existing legislation and regulations that cover the salmon farming industry. However, given that the wild Atlantic salmon in our country is now on the IUCN red list, and given the sometimes dire conditions that farmed salmon are kept in, it is hardly surprising that my noble friend Lord Forsyth of Drumlean continues to press this amendment. We are disappointed that the Government have so far failed to see its merits, and we hope for a more constructive reaction from the Minister today. We on these Benches will support my noble friend if he decides to test the opinion of the House.

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[Earl Russell (LD)]

There are no somersaults here. My previous amendment did not relate to devolution. I return the question: does the noble Lord admit that his amendment applies only to one salmon farm? Does he recognise that that is not a good way to make legislation? I fully support what he is trying to do, and am not doing somersaults to protect the Government, but the issue needs to be resolved with Scotland. This is not an English issue but a Scottish one. On these Benches, we believe strongly in devolution. The amendment sounds good but it does little, and that does damage to us as lawmakers, to the standing of this House and to devolution. It does nothing to protect any fish.

[Lord Forsyth of Drumlean (Con)]

I am grateful to the noble Earl. He may be disadvantaged, compared with others in this debate, because he is not—I do not think—a salmon fisherman. If he were, he would know that English salmon go through the Crown Estate waters up into Scottish waters, where there are salmon farms. Therefore, this amendment does impact on English salmon. There may be only one salmon farm, but if he was concerned about preserving salmon which occupy the rivers in England, he would be much more enthusiastic about this amendment than he appears to be. My noble friend Lord Douglas-Miller, who was chairman of the Atlantic Salmon Trust, has done wonderful work on this, so I am afraid that the noble Earl will not get away with the idea that, because there is only one salmon farm in English waters, a duty on the Crown Estate commissioners to consider the environmental impact has no impact on salmon south of the border.

I will repeat a point made earlier in the debate. In response to the amendment of the noble Earl, Lord Kinnoull, with enthusiastic support from the Front Bench, we agreed that there should be an exchange of views between the commissioners and that they should learn from each other. We have also heard from the Minister how the Scottish Government are utterly complacent about this. We have seen the results of that and the near extinction of this noble fish, the salmon.

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Moved by

[Earl Russell]

7: After Clause 2, insert the following new Clause—
“Climate change and nature duty of Crown Estate CommissionersIn the Crown Estate Act 1961, after section 1 insert—“1A Duty of the Commissioners to contribute to climate change and nature targets(1) In complying with the general duty under section 1(3) and in exercising their functions the Commissioners must take all reasonable steps to contribute to—(a) the achievement of targets set under Part 1 of the Climate Change Act 2008,(b) the achievement of biodiversity targets set under sections 1 to 3 of the Environment Act 2021, and(c) adapting to any current or predicted impacts of climate change identified in the most recent report under section 56 of the Climate Change Act 2008.(2) In carrying out the duty set under subsection (1), the Crown Estate Commissioners must include conditions in all seabed leases that require the leaseholder to contribute to the conservation and overall enhancement of the natural environment.””Member’s explanatory statement
This amendment would give the Crown Estate a new climate change and nature duty requiring it to take all reasonable steps to contribute to the achievement of the Climate Change Act 2008 and Environment Act 2021 targets in exercising its functions. The duty requires the inclusion of nature conservation measures in all seabed licences granted by the Crown Estate.

[Earl Russell (LD)]

My Lords, I rise to move Amendment 7 on behalf of the noble Baroness, Lady Young of Old Scone, who is not able to attend the House today. This amendment mirrors that laid in Committee by the noble Baroness, Lady Hayman, and supported by the noble Baroness, Lady Young, my noble friend Lord Teverson and the noble Lord, Lord Young of Cookham. It would lay a duty on the Crown Estate to contribute to the Government’s climate change and nature targets as laid out in the Climate Change Act and the Environment Act.

The Crown Estate’s role in enabling these targets to be met is significant. The Crown Estate is the third-largest landowner in the United Kingdom; in particular, it owns significant land in coastal areas and on the seabed, which is important for the big growth in renewable energy that is required and for the recovery of our biodiversity. The deal with Great British Energy means a major uplift in the Crown Estate’s contribution to net zero. The Crown Estate is also a major developer and can contribute to zero-carbon homes and construction, sustainable procurement, and the circular economy.

Since Committee, the noble Baroness, Lady Hayman, has been involved in discussions with the Minister and the Treasury, and Amendment 10 in her name and that of the noble Lord, Lord Livermore, is the result. This requires commissioners to keep under review the impact of their activities on the achievement of sustainable development in the UK. I understand that the Minister will also commit to an addition to the framework agreement between the Treasury and the Crown Estate which would mean that the Crown Estate would have to have regard for the impact of its activities on the environment, society and economy and will include them in considering relevant legislation in the Climate Change Act and the Environment Act. I thank the noble Baroness, Lady Hayman, and the Minister for their negotiations on this occasion.

However, I am concerned that it does not go far enough. While I recognise that the primary purpose of the Crown Estate is to maximise financial contributions to the Treasury from the estate and to do this in a socially and environmentally responsible way, I am concerned on two accounts.

First, as the Crown Estate ramps up its development activities in renewable energy and a range of other activities, the possibility of conflicts between its economic objectives and its environmental responsibilities will become more acute, and the risk is that the primary economic objective will take priority. That might be good for renewable energy, but it could be a very bad for biodiversity. To “have regard” is a particularly weak requirement. Putting in the Bill a clear objective to help meet the legally binding climate change and biodiversity targets alongside the Crown Estate’s economic objective would mean that solutions would be brought that combine the benefits on all these objectives.

Secondly, the status of the framework agreement is not wholly clear. It is negotiated periodically between the Crown Estate and the Treasury. Revisions to it could be subject to negotiation without Parliament being any the wiser. What if the Crown Estate decided that it was going to downplay the guidance on the legally binding targets? Over the 60 years since the power of direction over the Crown Estate was brought into existence in 1961, the Treasury has yet to insist on any provisions of the framework agreement. As a last resort, Ministers have the power of direction over the Crown Estate, but the legal advice is that it can be exercised only in a way that is consistent with the statutory duty under the Act, hence the need for the objectives on targets to be on the face of the Bill. Can the Minister tell the House how much welly the framework agreement has in law and what action the Treasury could take if the Crown Estate did not come up to the mark on the climate and environment targets?

I do not want to repeat the arguments made by noble Lords, including the noble Baronesses, Lady Young of Old Scone and Lady Hayman, in Committee. I will, however, remind the House that the Minister laid considerable stress throughout Committee, in his response to several amendments, on the need for the primary purpose of the Crown Estate to be the effective economic management of the estate. I point out to the House that a nearly identical duty to the one proposed in this amendment, requiring contributions to the legally binding biodiversity targets, was applied to NHS trusts throughout the Health and Care Act 2022 by the previous Administration, with the support of the Labour Party. It is questionable why the environmental considerations in the Bill, which were previously supported for the NHS, are not now considered appropriate for a public body with probably more natural habitats under its control, and more potential for reducing carbon, than any other.

In conclusion, I ask the Minister to reassure the House that the environmental objectives will not end up being second fiddle when the pressure is on; how the framework agreement renegotiations, in future, will be transparent and safeguarded from sliding back on environmental requirements; how the Treasury will measure and hold the Crown Estate accountable for the contribution to the climate change and biodiversity targets; and, finally, what sanctions the Treasury has on the Crown Estate if it does not deliver the framework agreement.

In a personal capacity, I thank the noble Baroness, Lady Hayman, and the noble Lord, Lord Livermore, for Amendment 10. Speaking now as me, I think that it is extremely important that the commissioners

“must keep under review the impact of their activities on the achievement of sustainable development in the United Kingdom”.

This is a welcome development, and I welcome the compromise. I think this helps to strengthen the Bill, and it is great to have it in the Bill. I am very pleased that this has taken place. I beg to move Amendment 7.

[Baroness Hayman (CB)]

My Lords, it is a pleasure to follow the noble Earl, Lord Russell. He clearly set out the reasons why in Committee, we, along with the noble Baroness, Lady Young of Old Scone, who I am sure we all wish a quick recovery, were very concerned to ensure that the Crown Estate, given its potential influence in these areas, plays its part in achieving the Government’s statutory commitments under the Climate Change Act and the Environment Act. Across the Committee, there were contributions that supported that view.

Of course, in some ways I would like the amendment that has just been moved to be put in the Bill. Here, I should declare my interest as chair of Peers for the Planet. Like others, I thank the Minister and his officials for the time, care and effort they have put into trying to resolve the issues that would arise if the full amendment were included in the Bill. From my point of view, it has been an exemplary process. The noble Baroness, Lady Kramer, made this point as well, as have many other noble Lords. The care and transparency that the Minister and his officials have provided throughout the passage of this Bill have been extremely welcome.

In Committee, when we were debating the amendment then in my name, the Minister made two things absolutely clear. One was the Government’s commitment to achieving the same ends by ensuring that the Crown Estate is a good citizen in respect of these events, and that is also manifested in what the Crown Estate is doing and the way it is reporting on its activities. So I think there is a shared objective between the amendment proposed by the noble Baroness, Lady Young of Old Scone, which we just heard spoken to, and the Minister and the Crown Estate. It is certainly shared by me.

Concerns have been articulated about the importance of safeguarding the prime objectives of the Crown Estate and not putting the detail into the Bill. I think we have come up with a solution that will achieve, certainly from my point of view, the vast majority of what I was looking to achieve in my original amendment. Amendment 10 would implement the climate and nature objectives by inserting in the Bill an obligation on the Crown Estate to conduct its affairs in a way that ensures sustainable development. That, of course, is a much wider and not very precise term that covers economic, environmental and social issues. Mind you, there has been a lot of debate this afternoon about the importance of the Crown Estate covering exactly those issues and taking them into account.

In a sense, having placed that in the Bill, we then have a paving amendment on to the framework agreement. I was very reassured by the letter we all received on 4 November, stating that the specific concerns about two aspects of the Climate Change Act—mitigation and our net-zero obligations, and the importance of adaptation to existing climate change and the nature protection objectives under the Environment Act—would be spelled out in the framework agreement and reported on publicly in the annual report, so that we can judge the contribution made to achieving those objectives through the publication of the framework agreement. Such reporting is another theme that has run through today’s debate.

In my view, it is better to achieve 80% of what we achieve in legislative terms than to have 100% judged by this House, which I am not at all sure we would win on. What matters is the endgame and the results, not whether my phraseology or the noble Earl’s goes in the Bill. What matters is the impact we have and how much we have shifted the dial in terms of what the Crown Estate achieves in support of the Government's climate and nature objectives. So, I am very pleased to be able to propose Amendment 10 and I am grateful to the Minister for adding his name to it.

I will say only one other thing, which is that I have spent the last four and a half years putting provisions like this into individual Bills as they go through this House. I hope the Government will recognise that, when they say that climate and environment issues are for everybody and that all departments, private industries and public bodies are affected and ought to be looking at the implications, they act on that realisation and do not rely on Back Benchers making Ministers’ lives miserable because they have been missed out. The Government should cut out all that argument and do it for themselves by including those issues in Bills. They were not included in the first place in this Bill, which was silent on the climate and nature. Now they are included, albeit in slightly convoluted but, I hope, effective way.

I end by saying once again how grateful I am to the Minister and his team for the constructive way in which they have handled this issue.

--- Later in debate ---

I hope noble Lords can see that the Government have made efforts to alleviate the concerns raised on this topic. I hope that the noble Earl, Lord Russell, on behalf of the noble Baroness, Lady Young, feels able to withdraw Amendment 7 as a result.

[Earl Russell (LD)]

My Lords, speaking on behalf of the noble Baroness, Lady Young: yes, she is prepared to withdraw her amendment. I welcome the Government’s response to her amendment; I think even she realises that it was perhaps the gold-plated version. As the old saying goes, a bird in the hand is worth much more than a bird in the bush.

I return to my own persona to close this group of amendments. I congratulate the noble Baroness, Lady Hayman. It is extremely important that these duties are there, that they are written in the Bill and included in the framework agreement, and that the Crown Estate needs to report on them. These, taken together, are not constraints but real responsibilities that the Crown Estate will need to meet. They are safeguards that exist for evermore; that is a powerful thing in protecting the environment. I congratulate the noble Baroness, Lady Hayman, on all the work that she does; here we have another Bill, with another of her amendments being accepted.

Before I sit down—I know the hour is late—the noble Lord, Lord Krebs, has a Bill before this place to do some of this stuff for evermore, so that we can free up parliamentary time to discuss other things. As a final word, I encourage the Government to consider lending support to his Private Member’s Bill so that we can free up parliamentary time, put this in all the places where it needs to be, make sure that these protections are in place, and use our parliamentary time for other matters. But I am delighted that this has happened in this case. I thank the Minister, and I beg leave to withdraw Amendment 7.

Amendment 7 withdrawn.

--- Later in debate ---

Moved by

[Earl Russell]

9: After Clause 2, insert the following new Clause—
“Regional Wealth Fund and Skills Training FundAfter section 4 of the Crown Estate Act 1961, insert—“Regional Wealth Fund and Skills Training Fund (1) The Commissioners must use the funds from the Crown Estate to establish a Regional Wealth Fund and a Skills Training Fund, as set out in subsections (2) to (9).(2) The Commissioners must ensure that a percentage of the Crown Estate’s license fee for leases of Crown Estate land for offshore wind power development is given to a regional wealth fund.(3) The Commissioners must agree regional boundaries of the regional wealth fund in consultation with local government.(4) Funds from the Crown Estate’s license fee for such leases must be distributed to the nearest regional wealth fund to the offshore wind power development.(5) The Commissioners must ensure that a percentage of the Crown Estate’s profit is given to a skills training fund (“the fund”).(6) The Commissioners must ensure that the fund works to provide persons residing or employed on the boundaries of or on the land of the Crown Estate with skills training to equip them to perform jobs in the green economy.(7) The Commissioners must ensure that those administering the fund consult with appropriate national and regional organisations and industry to agree the type of training that the fund will provide to meet the requirement under subsection (6).(8) The Secretary of State must by regulations set the percentages under subsections (2) and (5).(9) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.””Member’s explanatory statement
This amendment would require the Commissioners to establish a Regional Wealth Fund and a Skills Training Fund.

[Earl Russell (LD)]

My Lords, it is quite late and we have run over our time, so I will be brief with this amendment. To be honest, my plan was never to call it to a vote. This is an amendment that I tabled at previous stages of the Bill. It calls on the commissioners to do two things: to establish a regional wealth fund and a skills training fund. I believe that both are important. That is why I have brought this amendment back today. As I said, I will speak to it very briefly.

On the regional wealth fund, we are going through one of the biggest energy transitions that this country has experienced since the dawn of the Industrial Revolution. A lot of stuff needs to be built; a lot of change is coming. The Government need to take people with them on that journey. It is not for Whitehall and central government to do this to people. It is for this Government to do things with people, for people, and to take people with them on that journey. I say these things because they are important. We on these Benches want to see Labour succeed in these missions. If public support wanes, that will not happen.

I believe also in devolution; we believe in devolution on these Benches. We believe that local communities should benefit from the energy that they host, and from the infrastructure that sits in their communities. We believe very much in community energy as well. In legislation to come, we will have GB Energy. From these Benches, we will be pushing the Government strongly to go further on community energy. We think it is an important part of the puzzle that can be achieved within the GB Energy Bill.

I move on finally to skills and training. The green revolution is a revolution; it will change all our lives. It offers real opportunities, not just to decarbonise and meet our climate commitments but for Britain to grow new industries to be new world leaders and to train people to take on new jobs, the jobs of the future, which we need to grow our economy.

The Budget this week, for all the investment, had very little growth coming out of it. I personally worry that there was very little money in the Budget for skills and training. The year 2030 will be here in a blink of an eye. To meet our targets, we need people to be able to build all this stuff, to make this thing happen; otherwise, our targets will not happen and will not be met.

The Crown Estate sits at an important juncture between the big industries and the local communities. It is already doing a very good and imaginative job in this area. I simply call on the Government to do more: to work with the Crown Estate to help create these skills; to help support our local communities; and to help bring people with them and alongside them on this journey, so that we can all transition together. I beg to move.

[Lord Livermore (Lab)]

My Lords, I will respond to Amendment 9 tabled by the noble Earl, Lord Russell, on the topic of local and community benefits. As I set out in Committee, the Government are committed to working closely with the Crown Estate to support our target of clean power by 2030 by collaborating to accelerate and derisk the sustainable delivery of technology such as offshore wind. As I noted in Committee, local communities already benefit from onshore and offshore developments in the form of the economic benefits that such developments bring, including job creation and increased business for local suppliers. Individual developers also contribute to local initiatives.

Over the longer term, local communities will also benefit as we accelerate our transition away from volatile fossil fuel markets to clean, homegrown power to boost Britain’s energy independence and security. The Crown Estate has also specifically designed the leasing process for the offshore wind leasing round 5 opportunity in the Celtic Sea in such a way that developers have to make commitments to deliver social and environmental value as part of the development of their new windfarms.

I turn to the second part of the amendment, on a skills training fund. As I have previously made clear, the Government of course support the spirit behind the amendment. We are committed to clean energy by 2030, accelerating to net zero and promoting biodiversity. To meet those ambitions, we need to make sure that our workforce has the knowledge and skills to succeed in the green economy, both now and in future.

As part of that effort, the Department for Education has set up Skills England, a new body that will tackle skills shortages and support sustained economic growth. The Government also introduced the Institute for Apprenticeships and Technical Education (Transfer of Functions etc) Bill in this House last week, which among other things will help to support the establishment of Skills England. As I highlighted in Committee, the Crown Estate is dedicated to supporting skills and training.

As I have said previously, the Crown Estate consults extensively with communities, charities, businesses and the Government to ensure that its skills initiatives are sensitive to market demands and emerging technologies to keep them relevant and effective. The Government consider it important that the Crown Estate retains that flexibility in how its skills initiatives are funded and delivered to ensure that it can contribute to skills training in the best possible way.

I hope these explanations have been helpful and I have provided some clarity on the points raised. I hope the noble Earl, Lord Russell, feels able to withdraw his amendment as a result.

[Earl Russell (LD)]

My Lords, I thank the Minister for his response. I am of course able to withdraw my amendment. I recognise the work that the Government are doing in these areas, but there is a need for more to be done. I do not think that working with the Crown Estate would impact other work; it would actually strengthen it. As I said, it sits in a unique juncture that would be particularly helpful in bringing industry together with communities to create local jobs and provide training. However, I note the work that the Government are doing and I thank the Minister for his response. I beg leave to withdraw the amendment.

Amendment 9 withdrawn.

Crown Estate Bill [HL]

Earl Russell Excerpts

3rd reading
Monday 18th November 2024 Lords Chamber

[Lord Berkeley (Lab)]

My Lords, I intervene briefly to congratulate my noble friend on getting this Bill as far as he has. I was very pleased to see that His Majesty the King has given consent to a Bill which will make him many times richer over the course of the next decade or so—that is good. I ask why the Duke of Cornwall has not been included in this. We have been debating his involvement for some time and it would be good to know whether the Duchy approved this Bill or not.

[Earl Russell (LD)]

My Lords, I briefly thank the Minister and all his Bill team, and Members of the House who have taken part in the debates on this Bill and contributed to many worthwhile and positive changes to the draft legislation. From these Benches, I reiterate that we support this partnership with the Crown Estate and believe it is important as part of our energy transition.

My sincere belief is that the Bill leaves us in a stronger and better place than when it arrived. We have all worked constructively to make important amendments. I thank the Minister for his courteous engagement and positive response to the issues that noble Lords have raised with him.

The publication of the business case, largely thanks to my noble friend Lady Kramer, has meant that the memorandum of understanding has given confidence and a better understanding of the partnership with GB Energy and how it will operate in practice. That was a key element in the House’s understanding.

The Minister has spoken from the Dispatch Box on the cap on the level of borrowing. That was most welcome as there is no cap in the Bill.

I thank all those who raised the important issue of devolution of the Welsh Crown Estate. A compromise agreement from the noble Lord, Lord Hain, ensured that there were concessions and that all the commissions from the devolved regions have a place.

I congratulate the noble Baroness, Lady Hayman, and the Minister on working together to agree an environmental duty. I also thank the Minister for adding a duty to report on the relationship with Great British Energy. Taken together, it is extremely important that these duties are written into the Bill and included in the framework agreement, and that the Crown Estate needs to report on them. These are not constraints but real responsibilities for the Crown Estate, which will need to meet them. They are safeguards that will exist for evermore.

It was a pleasure to move the amendment tabled by the noble Baroness, Lady Young, which might perhaps be taken up in the Commons. I thank the noble Baroness, Lady Vere, for her amendments. I am disappointed that her amendment on pre-appointment scrutiny for the chair of the Crown Estate board has not come back today, but that too may be taken up in the Commons.

[Lord Wigley (PC)]

My Lords, I thank the Minister for having made a bit of progress with regard to Wales in the Bill. Having the nominated person is a step in the right direction. It does not deliver everything that we and the noble Lord, Lord Hain, were pressing for, but I hope we will return to this. I have coming up for Second Reading a Private Member’s Bill on the devolution of the Crown Estate to Wales, as Scotland benefits from, but I thank the Minister for a small step in the right direction.