Crown Estate Bill [HL]

Lord Livermore Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Baroness Vere of Norbiton (Con)]

My Lords, I am very grateful to my noble friend Lord Holmes of Richmond for introducing his amendment, which leads this group, which is fundamentally concerned with the generation of energy on assets owned by the Crown Estate. This is even more important now that there is a formal relationship with GB Energy, which has been announced, although I accept that details of the relationship are quite thin on the ground. I entirely support the intention of my noble friend Lord Holmes of Richmond to require the publication of a report on the potential for energy generation on the Crown Estate, and I draw attention to my Amendment 35, which would ensure that no new electricity generation licences are granted without confirmation that a corresponding grid connection exists.

The problem of grid capacity, connection and storage is real and important. In May of this year, a House of Commons Environmental Audit Committee report found that in order to achieve net zero targets,

“the transmission and distribution network must develop and expand alongside the growth in supply and demand”.

It concluded that renewable energy generation may be stunted by “slow grid connections” and “limited grid capacity”. That is the issue I am trying to fix, and that all noble Lords are very much focused on. The Government must continue to look at it urgently if they are to build on the previous Conservative Government’s progress toward our clean energy targets. However, it is not an easy task. Even Green Party parliamentarians have been known to be vociferously opposed to measures to boost national grid capacity. I hear a Liberal Democrat laughing, and I am not entirely sure that that is appropriate. However, in the face of that kind of opposition, I ask the Minister to reassure the House that the Government have a plan to get on with increasing our national grid capacity.

At this point, I think it worth pushing the Minister, although we will come back to this on a later group, on the partnership with Great British Energy, which was announced to great fanfare a few months ago. I am still at a loss to explain how the new partnership between the two organisations, the Crown Estate and Great British Energy, will work and what difference it will make; indeed, this is the point of my amendment.

When the previous Conservative Government announced in the 2023 Autumn Statement plans to work with the Crown Estate to increase offshore wind capacity, that was predicted to unlock a further 20 to 30 gigawatts of new offshore wind seabed rights by 2030—great; that seems very fair. The Government have claimed that this new partnership will

“cut the time it takes to get offshore wind projects operating and delivering power to homes by up to half”.

Okay, but their press release of 25 July 2024 stated:

“The Crown Estate estimates this partnership will lead to up to 20-30GW of new offshore wind developments reaching seabed lease stage by 2030”.


To coin a phrase, nothing has changed. What difference does the partnership with GB Energy actually make, or did the Crown Estate get it wrong when it was working with the previous Government? Noble Lords can see the issue I have here: I do not understand how the tie-up with GB Energy is going to benefit that organisation, the Crown Estate and, indeed, the nation.

That, among other reasons, is why I tabled Amendment 34, which also requires a report on the energy generation supported by the Crown Estate. Its scope is wider than Amendment 16 and it facilitates greater oversight via reporting. It requires the Crown Estate commissioners to report annually on not only the expected impact of the relationship between the Crown Estate and GB Energy, but the actual impact. It would also include the investment strategy for capital investment in the infrastructure, including port infrastructure. This is where I am confused, because when I speak to the port sector, it tells me that finances are not particularly an issue. In a report published last month, the British Ports Association recognised that the sheer scale and speed of the investment needed to meet the ports’ offshore energy ambitions is significant. However, it called for a carefully managed investment in ports that fills gaps in ports’ supply chains that cannot be met by the private sector. These gaps can be filled by, for example, the national wealth fund, the Crown Estate or Great British Energy. Can the Minister explain who is managing, and which organisation will be investing how much in what, and when? I, for one, am confused. It is right to get some insight into this now, and to monitor progress in the future.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I will address the amendments tabled by the noble Lord, Lord Holmes, and the noble Baroness, Lady Vere, both of which touch on the topic of energy. I will start by addressing Amendment 16, tabled by the noble Lord.

This amendment would require the Crown Estate to publish a report within 12 months on the potential for energy generation on the Crown Estate, covering onshore and offshore wind grid capacity and energy pricing. While the Government are not in principle opposed to the Crown Estate producing specific reports on energy generation on its own estate, it is not within its remit or ability to report on grid capacity or pricing. As I have set out previously, the national grid and relevant transmission and distribution network operators are responsible for the UK-wide strategy on grid connectivity, and the new National Energy Systems Operator will be responsible for creating a strategic spatial energy plan, which will provide future clarity on grid connectivity.

The Crown Estate has already published, in September, a 53-page report entitled Future of Offshore Wind: Considerations for Development and Leasing to 2030 and Beyond, which looks at, among other things, the prime areas of opportunity for new wind farms. It has also recently published a Marine Delivery Routemap, which sets out its vision for the seabed and coastline.

Amendment 34, tabled by the noble Baroness, Lady Vere, would require the Government to publish a report on the scope, nature and expected impact of the relationship between the Crown Estate and Great British Energy within six months of the passing of the Act, and thereafter publish an annual report. The Government have no principled objection to such a report, but the timing might be more usefully linked to the passing of the Great British Energy Bill, currently in the other place, rather than the Bill we are discussing today.

--- Later in debate ---

[Baroness Kramer (LD)]

My Lords, I will be very brief. I want to thank the Minister for the clarifications he gave on the difference between the framework agreement and the memorandum of understanding—it was really helpful of him to provide that today rather than wait for the next Committee date. While I am on my feet, I will use this opportunity to reinforce the probing amendments of my noble friends Lord Teverson and Lord Russell.

We are in an era of substantial change and I am sure the Minister is very aware of that. The greatest resistance to change comes from a measure of distrust and cynicism; people usually feel that change is not an opportunity, but will be something where they lose and others win. There is also very little trust of very big organisations and of organisations that are controlled at a physical distance from the area that people live in and know. With the proposals for a regional wealth fund and a focus on creating skills within the immediate community, the areas that have visible detriment can now also identify the possibility of benefit in a very real way. That makes change happen more rapidly.

I also come from a party that has great confidence in regional decision-making. Sometimes people use the words “postcode lottery”, but it is not that: it is that people within an area, knowing their local communities and people much more intimately, can target the programmes they put in place to benefit the lives of local people far more effectively than a distant decision-making entity can. I hope the Minister will look at this because, although we are talking about this Bill, we are in a much broader period of change. Creating a strategy such as regional wealth funds, used in this and possibly other instances, will give people the confidence that their community—their people, themselves and their families—will see some direct benefit, rather than being left in a situation where they cynically believe that they are carrying the detriment and that other people will benefit.

[Lord Livermore (Lab)]

My Lords, I will respond to the amendments tabled by the noble Lord, Lord Teverson, and the noble Earl, Lord Russell, both of which touch on the topic of local and community benefits.

Amendment 27, moved by the noble Lord, Lord Teverson, would require that a percentage of the Crown Estate’s licence fee for leases for offshore wind developments is distributed to a regional wealth fund. The Government are committed to working closely with the Crown Estate to support our target of clean power by 2030, by working collaboratively to accelerate and derisk the sustainable delivery of technologies such as offshore wind.

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, home-grown power to boost Britain’s energy independence and security.

The Crown Estate has also specifically designed the leasing process for its 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 wind farms. Tender bidders are required to think innovatively and constructively about how their developments can create a legacy of healthier, more resilient, fairer, vibrant and more prosperous communities, which stretch beyond the lifetime of the wind-farm leases for the benefit of generations to come. Commitments made during the tender process will be monitored, reported on and enforced throughout the lifetime of the relevant round 5 developments.

I recognise that this amendment would go even further, requiring a direct financial contribution from the Crown Estate to local communities. In essence, this is a very similar proposal to that put forward in Amendment 23, requiring a transfer of profits to the Welsh Government, as debated earlier. The concerns I set out there also apply here. Again, agreeing an appropriate level of payment would not be straightforward, because the relevant revenues and costs cannot be easily disentangled from the Crown Estate’s overall financial flows. Any arrangement of this nature would reduce the profits that the Crown Estate pays into the UK Consolidated Fund, reducing the revenues that can be allocated by the Government to the needs and priorities of the day, across all the UK.

Amendment 33, tabled by the noble Earl, Lord Russell, would require the Crown Estate to pay a percentage of its profits into a skills training fund. It would also require that this fund works to provide skills training to persons residing on or employed by the Crown Estate to equip them to perform jobs in the green economy and that the training is agreed with industry in advance.

The Government are, of course, very supportive of the spirit behind this amendment, and I agree with much of what the noble Earl said about skills. We are committed to clean energy by 2030, accelerating to net zero and promoting biodiversity. To meet these ambitions, we need to make sure our workforce has the knowledge and skills to succeed in the green economy, both now and in the future. As part of this 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 will, among other things, help support the establishment of Skills England.

The Crown Estate is dedicated to supporting skills and training. As a UK company with a payroll of over £3 million, the Crown Estate pays the apprenticeship levy—0.5% of its payroll over £3 million—and hires apprentices into its business. It also runs various targeted initiatives. For example, it has an existing partnership with the Department for Work and Pensions to address recruitment barriers and is training a pool of 60 job coaches in the east of England, with plans to expand. It is also developing a skills pipeline among the 14 to 16 age group, and has already seed-funded a pilot GCSE qualification in engineering skills for offshore wind, developed by Cornwall College. The Crown Estate also works closely with Pembrokeshire College on the Destination Renewables pilot course, which equips students with skills for careers in renewable energy. In Grimsby, the Crown Estate partners with Projekt Renewable, which aims to spark local community interest in offshore wind activities and encourage careers in that sector.

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 this flexibility in how its skills initiatives are funded and delivered, to ensure it can contribute to skills training in the best possible way.

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

[Lord Teverson (LD)]

My Lords, strangely enough, I am going to withdraw my amendment, to the shock of the Minister. However, I am seriously disappointed with the response.

I get absolutely all the supply chain arguments about development and maintaining offshore windfarms after the event, once they are operating. However, as the Minister knows himself, although some of the beneficiaries of those supply chains are local, some of them are international and are certainly not anchored to the region and those communities. The great thing about the Shetland example was that while the oil industry did very well—suppliers and lots of people came in—there were whole areas of the population of the Shetland Islands that did not benefit directly from those developments. Yet they did in the end, because of community wealth schemes—two of them, I think—that happened in Shetland. The same is true regionally.

When it comes to the argument that the Crown Estate would lose out on money or whatever from this, I would put the opposite view. A community or regional wealth fund would actually accelerate the ability to deliver these projects, because there would not be the opposition that there might be otherwise. I absolutely agree with the noble Lord, Lord Bellingham, and thank him for his contribution. It was good, as always, and emphasised the effect of coming onshore and all the facilities that are required, such as pylons and all the rest of it.

What it comes down to is a matter that I think everybody normally agrees with: a just transition. A regional wealth fund allows a just transition. I was going to quote back the Labour Party manifesto on just transitions, but strangely enough it does not mention that the transition should be just. That is a shame, but I genuinely believe that this will allow this important programme, which the Government are rightly pushing forward, to accelerate, be successful and have local and regional acceptance. At this point, I beg leave to withdraw my amendment.