Crown Estate Bill [Lords]

James Wild Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

[James Wild (North West Norfolk) (Con)]

The work on reforming the Crown Estate was developed by the previous Government. I am pleased to be debating the Bill today, and I thank my noble Friends for the scrutiny they have already provided.

We support the objective to increase the Crown Estate’s ability to compete and invest, so that it maintains and enhances the value of the estate and the income derived from it. Assets managed by the Crown Estate are not the property of the Government, nor are they part of the sovereign’s private estate. Since George III, the assets have been held in right of the Crown, which encompasses the interests of the sovereign and the Government. That is why appropriate scrutiny of the Crown Estate and its £15.5 billion in total assets is important. It has a rural portfolio of 185,000 acres, manages roughly 7,400 miles of coastline, has one of the largest property portfolios in the west end and returns all its profits to the Treasury. Last year, there was a record profit of £1.1 billion, up more than £600 million largely due to fees from round 4, and it has generated £4.1 billion for the nation’s finances over the past decade. There is, however, the potential to do more. In the business case prepared under the last Government, the Crown Estate estimated that changes in the Bill would enable it to generate £100 million a year in additional revenues by 2030. It is right, therefore, that we help to modernise the Crown Estate as it aims to create lasting prosperity for the nation.

Although we support the Bill’s aims, further scrutiny is obviously needed in some areas, including a limit on the level of borrowing, governance, the relationship with Great British Energy and safeguards in relation to the disposal of assets. I will come to each in turn.

As we have heard, the kernel of the Bill is clause 1, which confers on the Crown Estate a broader power to borrow, subject to Treasury consent. While I note the need for Treasury approval, a lack of parliamentary oversight on borrowing levels is a concern. When pushed by Baroness Vere of Norbiton and other noble Lords, the Government stated that a limit on borrowing

“is better placed outside of legislation”—[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1400.]

and instead should be placed in the memorandum of understanding between the Crown Estate and the Treasury.

The MOU sets out that the Crown Estate can borrow up to 25% of the worth of its total assets, but an MOU is easily altered. Public borrowing levels should be transparent. If Parliament is being asked to remove restrictions on borrowing, why should there not be a cap in legislation with the ability to swiftly amend it through a statutory instrument, if necessary, to protect against unconstrained borrowing and the concerns that my right hon. Friend the Member for The Wrekin raised?

[Mark Pritchard]

I agree with my hon. Friend that the Crown Estate and Treasury’s framework agreement was ineffective, or that at least it could have been strengthened. The memorandum of understanding is in a similar vein. I therefore support him.

Will he comment on this? I have concerns about the Bill. I agree with the general principle but there are potential fiscal and reputational hazards ahead for the Crown—not just the Crown Estate—if some of the investments go south. Also, at the moment there is a link between the Crown Estate and the sovereign grant. I think it is around 12%, as not all the income to the sovereign grant is derived from the Crown Estate. However, if the investments were to go wrong, who would be liable? If we have a weak MOU with no statutory oversight, it is more likely to go wrong.

[James Wild]

My right hon. Friend is absolutely right to highlight the potential risk. There is no one-way bet in life, and there is no guarantee that the Crown Estate will successfully invest in projects that go well. I will come on to the point about the energy side of things later in my speech.

It is perfectly reasonable, as we proposed in the other place, to have that 25% cap in legislation, which could be amended. I am sure we will consider the issue further in Committee.

The Bill alters the governance of the Crown Estate and provides for the number of commissioners to be increased to 12. Given the extension of the powers and the decrease in parliamentary oversight, pre-appointment scrutiny is of great importance. Again, I thank Baroness Vere for seeking and securing assurances from the Government that the chairman of the Crown Estate commissioners could be added to the Cabinet Office pre-appointment scrutiny list. Just before Christmas, Ric Lewis was announced as the preferred candidate for the role and I am pleased that the appointment will now be considered by the Treasury Committee. Will the Minister confirm in his winding-up speech whether other commissioners will be subject to any pre-appointment scrutiny?

Turning to salaries, which I do not believe the Chief Secretary referred to, under clause 2, Parliament will no longer be responsible for approving them through the estimates. Instead, they will be paid out of the income of the Crown Estate. Currently, the framework document sets out that remuneration of the chief executive should be in line with or below that of an appropriate benchmark group approved by the Treasury and that a clear majority of the chief executive’s total reward should be conditional upon performance. We support rewarding success, but with the loss of parliamentary oversight, will the Minister confirm whether any changes are proposed to the remuneration framework and, specifically, for the chief executive? Will he undertake to report to the House on any such change in future?

Turning to Great British Energy, on the day the Bill was introduced, the Government announced a partnership between the Crown Estate and GB Energy, which they claimed will

“unleash billions of investment in clean power.”

Indeed, the press release went on to say it

“will lead to up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030”.

However, there is a lack of transparency over how the partnership will work, the difference it will make, and its impact on the Estate’s primary duties. Given the supposed significance, I would have expected to have seen a partnership agreement by now, as without one, we do not know what has been agreed. Will the Minister confirm if there is a partnership agreement yet? Will he commit to publishing it before the Committee stage? Has the Crown Estate agreed to invest a certain amount with GB Energy? What process is there to ensure the Crown Estate continues to deliver on its duty to maintain and enhance the value of the estate? How will the Crown Estate decide between projects GB Energy backs and other projects that may have a higher rate of return?

The GB Energy founding statement adds to the confusion, adding that the Crown Estate

“will establish a new division ‘Great British Energy: The Crown Estate’.”

That raises several questions. Will new staff be required, or will it simply be a restructuring of the existing group? The statement also says it will sit

“under both Great British Energy and The Crown Estate, with strategy and investment agreed by Great British Energy.”

Will decisions be made jointly on investments, or will the Crown Estate retain its independence? Given the Government voted down our amendments to the Great British Energy Bill to introduce more accountability, it simply fuels some suspicion that the partnership has been created for political rather than economic reasons. The reporting requirements that were secured and added to the Bill in clause 4, which the Chief Secretary referred to, will at least help to bring some transparency to this, but there is a need for a lot more.

Under the previous Government, the UK became the first to more than halve emissions while growing the economy and became a leader in offshore wind. However, we must acknowledge that renewables are not cheap in all scenarios. There is clearly a risk that the Government will push up the cost of wind by rushing ahead to meet their political target and increase prices for consumers as a result. That is a far cry from the £300 cut in energy bills that Labour promised during the general election. As we scrutinise the Bill, Parliament has an important role to play to ensure the Government do not seek to use the Crown Estate to try and deliver the Energy Secretary’s damaging policies and undermine returns to the taxpayer.

As I set out earlier, the Crown Estate owns some vital assets, so it is surprising that there are so few safeguards to prevent commissioners from selling off such important assets. In the business case for the changes, the Crown Estate was planning £1.4 billion of disposals to fund investments, representing nearly 10% of its portfolio. When I asked Crown Estate representatives what that covered, they said they were unable to disclose plans for disposals because it is commercially sensitive information. Again, that raises concerns about transparency. In response to questions in the other place, the Government said they were working with legal experts

“to establish the extent to which the Crown Estate can currently sell the seabed”

for example. On Report, Lord Livermore confirmed that if the Government establish that

“further legislation is required to restrict the ability of the Crown Estate to sell the seabed,”—[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1412.]

they would bring forward an amendment.

I would be grateful if, in his winding up, the Minister could update the House on the process of those discussions and the need for such an amendment. The disposal of assets should be properly scrutinised. The Government rejected attempts in the other place to bring more scrutiny here and said that a statutory limit on disposals would undermine the flexibility of the Crown Estate to operate commercially. Given that the assets are held for the benefit of the nation, we should ensure some form of transparency if they are to be disposed of, whether that is reporting to Parliament, or seeking HMT approval for disposal of specific assets, or those over a set value.

Finally, let me turn to salmon. Clause 5 would require the commissioners to assess the environmental impact and animal welfare standards on salmon farms on the Crown Estate. If a salmon farm is causing damage or animal welfare issues, its licence would have to be refused. I commend my noble Friend Lord Forsyth of Drumlean for his tireless work on this matter and for highlighting that salmon farming can cause detrimental impacts in the event of escapes in terms of disease, breeding and other issues. Given that wild Atlantic salmon are now on the international union for conservation of nature’s red list, these are perfectly reasonable obligations which he said might influence how the Crown Estate of Scotland is to operate. The amendment was sponsored by Lord Forsyth, but also by Green and Labour party Members, so it is disappointing to hear the Chief Secretary to the Treasury talking about reversing that measure, and we look forward to that debate in the Committee stage.

[Mr Carmichael]

Salmon farming is enormously important in my community and in many other communities around the highlands and islands. Those communities will not be affected by this apparently, although we might hear conformation on that at a later stage, but is it the hon. Gentleman’s position that this is the only way of regulating salmon farmers? Is he not aware that there is a massive amount of regulation affecting salmon farming already? Does he really think that the Crown Estate commissioners are the people to be doing this job?

[James Wild]

Like me, the right hon. Gentleman will have read the Hansard reports of the debates in the other place where this issue was covered at some great length, so I defer to the points made by Lord Forsyth there. Regulation is obviously in place, but this addition would simply raise awareness of the issues in the Bill. The Government said that they supported the objective of the amendment when it was discussed in the other House, but did not think it was necessary. They did not think that it would do any damage, so I suggest that it remains part of the Bill.

To conclude, the Crown Estate Bill will help deliver the modernisation that is needed, but the purpose must be supporting the estate’s duty to maintain and enhance its value for maximised return to taxpayers, rather than becoming an extension of GB Energy’s cheque book. We will be pursuing the concerns that I have raised about checks on borrowing governance, the relationship with GB Energy and the safeguards in response to the disposal of assets to ensure that that remains the case.

--- Later in debate ---

[James Wild]

With the leave of the House, it is a pleasure to respond briefly on behalf of His Majesty’s loyal Opposition. [Interruption.] I do not know whether there is a party going on to which I have not been invited, but I am personally very happy to be here to take part in the debate.

This has been a good debate, with more than 10 Members contributing, and not only from coastal areas such as my Norfolk constituency; we have also heard from the hon. Member for Lichfield (Dave Robertson), which underlines the importance of the Crown Estate to all our constituencies.

The hon. Members for Truro and Falmouth (Jayne Kirkham) and for Camborne and Redruth (Perran Moon) spoke about the potential benefits of investment in their constituencies and their part of the world, including the funding of college courses, which are important, as well as investment in energy production.

The hon. Member for Mid and South Pembrokeshire (Henry Tufnell) may want to get some tips from the hon. Member for Great Grimsby and Cleethorpes (Melanie Onn) about how to get on with the Crown Estate, how to get it to do what he actually wants it to do, and how to secure the benefits for his constituency. Perhaps he can have a reset with the Crown Estate.

A number of Members spoke about community benefits, which are very important to securing public support for new infrastructure, be that energy or other issues. Labour Members spoke quite a bit about cutting energy bills. I distinctly remember the pledge they all made during the election campaign to cut energy bills by £300, but energy bills are going up and there is no date for when they will come down. Voters and constituents will remember the pledge and, at the moment, all they can see is their costs going up. The concern is that the pace at which the Energy Secretary wants to drive forward will actually drive up costs for all of our constituents.

I began my remarks by emphasising that the Crown Estate is neither the property of the Government nor part of the sovereign’s private estate. That is key. Its core purpose is to maintain and enhance the value of the estate and the income derived from it. That is why greater transparency is needed about the partnership with GB Energy. The Minister will have heard and, I am sure, noted down all the questions from my opening speech, so I will not repeat them all, but I will repeat this: will he commit to publishing the partnership agreement before we head into the Committee stage?

I am afraid that some of the contributions we have heard have only fuelled my suspicions of the Government’s intention to use the Crown Estate as a vehicle for its energy policy and as a provisional part of the GB Energy body, whatever that may turn out to be. That raises issues about how investments will be determined and the returns that are generated for the taxpayer, as well as the risk surrounding investments, whether crowding in, as hon. Members have referred to, actually happens, whether investment in ports will drive a return, and why commercial providers are not seeking to make similar investments. That conflict and risk was one of the concerns of my right hon. Friend the Member for The Wrekin (Mark Pritchard), who is sadly not in his place. I hope that the Treasury Committee will engage with that point when it examines the nominated new chairman of the Crown Estate commissioners.

That is also why it is important that Parliament has oversight of borrowing limits, rather than that just being in an MOU that can be changed at the Treasury’s whim. That is an important protection that we have in place, and I know that the Minister will also respond to that point in his remarks. Will he also get back to the specific point I raised about disposals and the seabed, and the commitment that Lord Livermore made on Report in the other place about protections and whether an amendment is needed and will be forthcoming?

To conclude, there is wide support for the Bill from across the House, but the short-term interests of the Government should not come at the long-term expense of the Crown Estate and the nation. I look forward to continuing the scrutiny of the Bill in Committee.

[Madam Deputy Speaker]

I call the shadow Minister to wind up.