Crown Estate Bill [ Lords ] (First sitting)

Lincoln Jopp Excerpts

Committee stage
Thursday 6th February 2025 Public Bill Committees

[James Murray]

I will turn to amendment 5 in a moment, but I will begin by briefly setting out what clause 2 seeks to achieve. The clause makes changes to the Crown Estate’s governance to bring the Crown Estate’s constitution in line with best practice for modern corporate governance. The clause makes three changes, which I will deal with in turn.

First, the clause increases the maximum number of commissioners on the Crown Estate’s board from eight to 12. That will provide the Crown Estate with the flexibility it needs to satisfy best practice standards for modern corporate governance. For example, the change will allow the Crown Estate’s board to include a wider combination of executive and non-executive members, both to reflect its increasingly diverse and wide-ranging activities and to enable it to adopt appropriate committee structures.

However, I assure the Committee that although we are increasing the number of commissioners, we are not changing the way in which they are appointed to the role, except for the new commissioner roles introduced by clause 6. The exact number and the respective roles of the commissioners within that new maximum will remain subject to the public appointments process. As such, additional commissioners will be appointed by the King on the recommendation of the Prime Minister, as is usual practice. That also includes the new commissioners with special responsibility that we will consider in our debate on clause 6, for which there will also be a process of consultation with the relevant devolved Government. The chair will face additional pre-appointment scrutiny, as the Financial Secretary confirmed in the other place.

Secondly, the clause removes the requirement for the second Crown Estate commissioner, a post currently held by the chief executive, to be deputy chair. This change will align the Crown Estate with best practice standards that set out that the roles of chair and chief executive should not be exercised by a single individual.

Thirdly, the clause will require the salaries and expenses of the commissioners to be paid out of the return obtained from the Crown Estate, rather than out of money provided by Parliament, which is the current position. Changing the source of funding for commissioner salaries is intended to demonstrate more clearly the relationship between the relevant expenditure and Crown Estate income, while also reflecting the Crown Estate’s commercial functions. However, the pay of the chair and other non-executive commissioners will continue to be set by Treasury Ministers. In line with the UK corporate governance code, that will not include any performance-related element.

[Lincoln Jopp (Spelthorne) (Con)]

Clearly, the highest standards of independence and probity will be required of the chair in order to execute their duties, particularly given that we have not brought back to Parliament the ability to raise debt on the assets of the Crown Estate. I feel duty bound therefore to ask the Minister whether he is aware of media reports that the Chancellor’s preferred candidate for chair is a recent Labour party donor who gave £15,000 to the Labour party in 2023 and £30,000 to the Foreign Secretary. It is not unreasonable of the shadow Minister’s amendment to seek that level of transparency by asking for any future changes to salaries for chairs to come back to Parliament.

[James Murray]

The hon. Member asks about the amendment tabled by the hon. Member for North West Norfolk, to which I was just about to turn. If he will allow, I will address the amendment and that will answer at least some of the questions he raises in his intervention.

Amendment 5 would require the commissioners to notify the Chancellor of the Exchequer of any proposed changes to the remuneration framework for the chief executive set out in the framework document and for such notification to be laid before Parliament by the Chancellor. I will set out the current arrangements on remuneration for the chief executive of the Crown Estate.

How the chief executive is paid is a matter for the Crown Estate’s board in the first instance. However, the pay is set with reference to the agreement between the Treasury and at a level that is at the lower end of the Crown Estate’s comparable peers, reflecting the national significance of the organisation. The framework document between the Crown Estate and the Treasury is clear that the Crown Estate

“will share any planned changes to the remuneration framework with HM Treasury to seek their agreement.”

I think that very much delivers on the spirit of the amendment.

The Crown Estate’s annual report and accounts already include as a matter of course a comprehensive report on remuneration and details of the chief executive’s pay. Taken together, those arrangements already deliver on the essence of the amendment and I hope that, with that explanation, the hon. Member for North West Norfolk will feel able to withdraw the amendment.

The primary intention of the Bill is to modernise the Crown Estate and ensure that it is best able to operate in a modern, commercial environment. These changes are central to that aim.