Crown Estate Bill [HL]

Lord Teverson Excerpts

2nd reading
Monday 2nd September 2024 Lords Chamber

[Lord Teverson (LD)]

My Lords, I declare an interest as chair of Aldustria Ltd, a very modest battery storage company which is plugging into the grid, as that is around a grid connection as well. As the noble Lord, Lord Liddle, said, some good work got done over the last year, in terms of not just grid connections but setting up the National Energy System Operator; it might be publicly owned, but I think National Grid still has responsibility for it. I would be interested to hear from the Minister about when the national energy system operator will operate from; it was due to be this summer, but I do not think it is quite going yet.

I thank the Minister for his time talking about the Bill at the end of last week. I think I welcome the Bill. I absolutely welcomed it to begin with but, as with all Bills, the more you get into it, the more you understand its limitations and perhaps some of the questions that arise.

The first subject I want to talk about is geography. I am afraid that I am going to talk about not Wales—I will come to Wales later, maybe—and not even Cornwall, but Scotland. It seems slightly strange that quite a large proportion of future offshore wind, which a lot of the Bill is about, is going to be in Scottish waters, and, as I understand it, GB Energy is going to be a Scottish company not an English one. There seems to me a disjointedness about the Bill ignoring Scotland—although it says that it includes Scotland, but not the Scottish Crown Estate—and the fact that GB Energy and a lot of future development will be north of the border.

My question to the Minister is: what discussions have taken place with the Scottish Government about extending the same freedoms to the Scottish Crown Estate? I specifically ask whether the option of using a legislative Consent Motion to allow amendments to the Bill to deliver that parity of treatment have been considered. Something like that seems necessary to bring the aspiration, which I think we all welcome, about offshore wind and its contribution to the renewable energy targets into the future—and by 2030 in particular.

The other area I want to talk about is the financial side—with some trepidation, as I am sure that my noble friend Lady Kramer will probably put me right after this debate. I come back to the point made by the noble Lord, Lord Howard: the reality is that the Crown Estate is just a wholly owned subsidiary of the Treasury. It is nothing to do with the Crown. Even the proportion that then goes to the Royal Family to do what it needs to can be altered each year—the percentage does not always stay the same. It is an animal of the Treasury, and we should see it as that.

One of the questions that struck me when going through the Bill about re-energising investment through the Crown Estate is that the money it spends, whether investment or current expenditure, is part of the public sector borrowing requirement, so what is the need to do this? Anything the Crown Estate needs to do, you might as well do through a government department anyway. It does not seem to me to make any difference so far as public expenditure.

There is, then, an issue—it comes back to some of the things that other noble Lords have spoken about—about transparency. The Crown Estate is not as transparent as many government departments, even the Treasury itself. Does this in itself become an issue? On finance, even on investment, as we have seen over the last one or two years, the amount that the Crown Estate can retain has been changed, for the capital account, from 9% to 27% to get around existing issues. Why cannot we just do that in future, so that the Crown Estate can benefit from its own cash flow, in terms of the capital account? In some ways, this seems to be complicated financial engineering that may not be necessary, but that is not a fundamental point.

The responsibilities of the Crown Estate—the Minister talked about them—are set out very well in its annual report, around net zero, natural resources and community. Perhaps we could look at some of those. On net zero, I really welcome the Government’s aspiration to bring forward investment, particularly in offshore wind, by preparing the case—environmental studies and all the rest of it that needs to be done beforehand. I was going to say that the Government will make it “oven-ready”, but that is rather a discredited phrase these days. Other European nations have done that. It must take a lot of effort, risk and timescale out of actually delivering those projects, so I very much welcome that.

I also welcome what is I think an aspiration—the Minister can put me right if not—around making licensing and obtaining the finance, bringing together the Crown Estate and the Low Carbon Contracts Company. Perhaps the Government can say whether that is one of their aspirations.

I welcome that ports in the supply chain will be invested in. However, much of the development will be in the other area which we were talking about, the Celtic Sea and the west coast. In the North Sea, a key issue has developed over time: a spaghetti of underwater cables. The EU is trying—we have now been included in the conversation—to make a grid and interconnectors, as has been mentioned already in this debate. It is incredibly important that we do not replicate that in the Irish Sea and the Celtic Sea. We should co-operate very strongly with the Republic of Ireland to ensure that is not the case. What has been forgotten—I almost expected the noble Baroness, Lady Hayman, to bring it up—is that the Crown Estate has a lot of terrestrial resources. Therefore, is it going to promote onshore wind as well, now that the Government, quite rightly, are liberating the planning conditions for onshore wind?

I will move on briefly to natural resources and biodiversity, raised by the noble Baronesses, Lady Hayman and Lady Young of Old Scone. In Cornwall at the moment, there are a large number of applications for seaweed farms. This is part of the Crown Estate trying to be more commercial, yet I do not believe that it is doing that within a context of understanding the ecology of the territorial waters or any of that side. It concerns me that it needs to understand the biodiversity issues around some of the commercialisations that it is looking at. More importantly, perhaps, it always strikes me that, as we know, the Crown Estate owns the territorial waters out to 12 miles. It has a slightly different relationship in our EEZ beyond that.

The 1961 Act imposes that the Crown Estate should maintain the value and condition of its investments. What it has never done, as I understand it, is intervene regarding fishing techniques such as bottom trawling or scallop dredging. It has the ability—that is its property—of pushing forward those vital marine and oceanic conditions where we keep biodiversity. Also, on net zero, whether it is seagrass, maerl or other forms of seabed vegetation, it is not a proper custodian of those resources. Only some 2% of marine protected areas are protected in terms of bottom trawling. That is absolutely not right on biodiversity and our net-zero gains.

Lastly, on community, all I will say follows the debate that we have had on Wales. Where there is offshore development—for example, the Celtic Sea and the Irish Sea—why is there not the equivalent, as there was in Shetland, of a regional wealth fund or a feeding back from those developments to regional communities? That is one of the things that I think will be demanded of this expansion of energy that we require. Through all this, we can have a better ecology, we can get closer to net zero and we can have a community that comes along with this legislation.

Crown Estate Bill [HL]

Lord Teverson Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

If the Government are to have a sporting chance of meeting the statutorily binding targets in the climate Act and the Environment Act, they need to recognise that the non-cuddly and highly impactful Crown Estate needs to be specifically tasked with making its important contribution to meeting these targets. That is what this amendment, so well presented by the noble Baroness, Lady Hayman, would do more effectively than any of the others that I have seen laid out in the amendment paper or heard discussed elsewhere. If there is indeed this good will and reality of commitment in the heart of the Crown Estate to do the right thing by climate and biodiversity, I do not believe that this would be regarded as an undue interference with its powers. The reality is that the Crown Estate, like anybody else, has to recognise that there are statutory targets which must be met and in which they have a big role. I hope the Minister will just give in and accept this amendment.

[Lord Teverson (LD)]

My Lords, I declare my interest as chair of the Cornwall & Isles of Scilly Local Nature Partnership. I will be over in the Isles of Scilly on Wednesday and I hope that I can bring good news from this debate, but we will see when the Minister responds.

My noble friend Lady Kramer is absolutely right, as other Members have said, that the Crown Estate is an organisation very focused on its financial returns and helping the Treasury out with raising cash on behalf of taxpayers. That is all very noble—in fact, it acts very much as if it is looking at its fiduciary duty as we would see in a financial organisation or corporate structure.

I congratulate the Crown Estate, first, on its Marine Delivery Routemap. It is an excellent document that came out last month and shows great intention—although I would be interested to hear from the Minister how it will co-ordinate that route map with the Marine Management Organisation and its marine plans. How do the two work together? How do we make sure they are not in conflict? Secondly, I very much welcome its High-Integrity Marine Natural Capital Markets in the UK—another road map for action—that was launched earlier this year, here in Parliament.

The third thing that I welcome, although with some incredulity that we did not do it decades ago, is the detailed mapping of the seabed around our islands. One would think it essential not only that we do that but that we have understood it for some considerable time, given the importance to us of that national asset.

Also, I congratulate the previous Government on declaring a ban on bottom trawling and similar measures—dredging—in 13 marine protected areas, moving forward in that way in March this year. When I looked at the maps, it was not all those MPAs, and others are not covered, but congratulations on that. I understood that it was the previous Government’s intention that the remaining marine protected areas should be protected in a similar way by the end of this year. I would be very interested to hear from the Government whether they wish to implement that as well. I certainly hope so.

One of the things that particularly came out to me, when I read that Marine Delivery Routemap, began on page 6, where it starts to write its own objectives. Let me read out the first sentence of that and those first two objectives. This is the Crown Estate’s purpose and strategy, in its own document. It says that:

“At the heart of everything we do lie four core objectives”.


I will read out just two, but remember that these are the first two, not the last two. The first is:

“Be a leader in supporting the UK towards a net zero carbon and energy-secure future”.


That is excellent. The second is:

“Take a leading role in stewarding the UK’s natural environment and biodiversity”.


That is excellent as well. I suggest to the Government that we just paste those objectives into this Bill. The Crown Estate clearly would welcome that, and we would have a solution near to what the noble Baroness, Lady Hayman, and other noble Lords who signed up to the amendment require. It is there to be accepted.

I also have Amendment 28, which is around the seabed. I very much welcome Amendment 14 tabled by the noble Lord, Lord Holmes, as well; we are trying to achieve the same thing here. Importantly, the seabed is not just a source of huge biodiversity for us as a nation but a huge carbon store. It is estimated that the first 10 centimetres and the flora and vegetation on the seabed accounts for something like a quarter of a billion tonnes of CO₂—which can be disturbed strongly by fishing methods. It is an important carbon sink but one where we have an important well of biodiversity.

It is incredulous to me that the owner of that seabed, an owner of property, allows it to be despoiled in the way very well described by the noble Lord, Lord Holmes. Surely we need to move beyond those MPAs, to stop those destructive forms of exploitation. If we change the objectives of the Crown Estate to reflect its own intentions, it could indeed take those measures to protect that biodiversity and to grow that carbon sink—sea-grass and marl and the areas of salt marshes and kelp. Those are important areas of carbon reduction and carbon sink as well as of biodiversity. It is absolutely clear. The Government should take up the amendment tabled by the noble Baroness, Lady Hayman, which is very much in line with the Crown Estate’s own objective.

One thing has not been mentioned on why this is important. One of the Government’s objectives, which I am fully behind, is to do a lot of the pre-environmental and technical work before licences are given out to offshore wind operators. That will speed up the process. It makes it a lot more holistic and makes a lot of sense. However, given that role with the Crown Estate, there is a conflict of interest that potentially arises between trying to get income from those leases while protecting the environment. At the moment, the emphasis is on the financial side and making money out of the leases. Only by putting these objectives as statutory into the Crown Estate can we be sure that there is not that conflict of interest, and that those objectives are balanced when those leases are put out.

We have boasted of a 30 by 30 objective internationally, nationally and in a number of areas regionally in Cornwall and the Isles of Scilly. There are only five and a quarter years until we get to 1 January 2030. Clearly, in marine—and in terrestrial as well—it is essential that the objectives of the Crown Estate reflect that objective and make it achievable in some way, otherwise there is a huge risk that we will not reach those government objectives.

[Lord Berkeley (Lab)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Teverson. I congratulate him on the work that he is doing in Cornwall and the Isles of Scilly.

I support these amendments for two reasons. First, earlier this year the noble Baroness, Lady Willis, and I discovered that Defra’s JNCC had produced a report advising the Government not to drill for oil in MPAs. We had a debate about it and the noble Lord, Lord Callanan, basically said, “Drilling for oil is more important than protecting the environment”. I do not know what has happened to that. Perhaps my noble friend the Minister could come back to me at some point and say, but that was a very low point. The reports were very good, and I do not think that the oil demand for this country needed to have particular oil wells. I might be wrong, but I think it was in the 33rd oil and gas licensing round. We must be pretty careful about this. As the noble Lord, Lord Teverson, said, there is a balance to be drawn.

I do not know whether the noble Lord, Lord Teverson, has talked to the fishermen’s association in Cornwall. I have been talking to it, at its request, and it is concerned. It is a reasonable concern, because he is quite right about some of the methods used in fishing at the moment, which are pretty unacceptable. On the other hand, those fishermen are frightened that, when we get these wonderful floating windmills in the south-west or anywhere else, they will be told that they cannot finish within several miles of the installation. I do not know whether that applies to the supply cables and everything else like that, but there needs to be a proper consultation about who needs what, how big these areas of protection are and, if necessary, where the fishermen can fish instead.

I am told that there is a report from Defra that was commissioned a year ago, entitled “Working on the Marine Special Protection Project”. I do not know whether the Minister knows about this. It has not been published but it would be a very good contribution to the debate if it could be and discussed with the fishing industry and the other people involved in offshore, and maybe a proper conclusion—

[Lord Teverson (LD)]

As we are in Committee, I would just like to answer one of those questions. I do speak to the Cornish Fish Producers’ Organisation and absolutely commend Chris Ranford, who operates it, for his great work in that area. The noble Lord is right. One thing that needs to come out of these planning areas is the fishing industry having the right spaces to fulfil what it wants to do in economic growth and the good things that happen to the local and coastal economies. This is important and I am thankful to him for mentioning it.

[Lord Berkeley (Lab)]

I am grateful to the noble Lord. We both need to have another discussion with Chris and his colleagues, as does the Minister, to make sure we can come up with something that works for everyone. I end by congratulating the noble Lord on his appointment; I look forward to working with him.

--- Later in debate ---

In addition to these protections, all leases granted by the Crown Estate for development that affects the seabed require the leaseholder to have the necessary statutory consents before development can begin. Statutory consent can take the form of a development consent order, a marine licence or planning consent under the Town and Country Planning Act.

[Lord Teverson (LD)]

I make this comment as a former board member of the Marine Management Organisation. The 2010 regulations, in particular, which have come through Europe, have been very ineffective, as has much on the Minister’s list. Hence, I believe it important that we put the responsibility down to the owner, rather than to some high-level legislation and regulations that departments have not paid a lot of attention to in the past.

[Lord Livermore (Lab)]

I am sure the noble Lord is much more expert in those things than I am. I take what he says seriously.

The decision to grant leases is informed by advice from the relevant statutory nature conservation body, either via the statutory consent process or, where appropriate, direct engagement. It can include enhancement requirements. Statutory nature conservation bodies are responsible for providing advice to government and regulators on the management, monitoring and assessment of marine protected areas. For those activities that are deemed exempt from statutory consents, the Crown Estate requires applicants to demonstrate that advice has been sought from relevant environmental bodies to inform their decision on leasing.

More broad protections, which would prohibit even temporary damage anywhere on the UK territorial seabed owned by the Crown Estate, would also cause major disruption to many critical marine sectors. These include, for example, offshore renewable energy, which requires the burial of power cables in the seabed to transport energy to shore; the laying of subsea and telecom cables, which carry 99% of all intercontinental data traffic for the UK; the UK’s ports, harbours, marinas and shipping channels within UK waters that require dredging for the creation and maintenance of navigable depths; and the manufacturing industry, which relies on marine aggregates, which are used, for instance, on major construction projects, beach replenishment and coastal protection schemes across the UK. The Government therefore consider these amendments to be unnecessary given the existing statutory protections and the Crown Estate’s existing practices.

I turn next to Amendments 37A, 37B and 37C, tabled by the noble Baroness, Lady Vere, which would all place new duties in respect of granting licences to access the seabed. Amendments 37A and 37B would prohibit the Crown Estate from granting new licences to access the seabed unless it has considered the impact of those licences on commercial fishing and commercial shipping. While the Government support the spirit behind these amendments, the Bill will not directly impact how much commercial fishing or shipping takes place in areas managed by the Crown Estate, nor is the Crown Estate responsible for the regulation of these sectors.

The Crown Estate collaborates extensively with industry stakeholders, statutory nature conservation bodies, environmental non-governmental organisations and marine licensing bodies to ensure activities on the seabed are conducted responsibly and enable a restored and thriving marine environment. A recent blog post from the National Federation of Fishermen’s Organisations, for example, noted on engagement with the Crown Estate ahead of the offshore wind leasing round 5 in the Celtic Sea that the

“process succeeded in identifying and avoiding the places where it would be most harmful to the fishing industry to see turbines installed. The cooperation between the Crown Estate and fishermen was unprecedented and the outcome was a positive one”.

The Crown Estate has also invested £50 million in the offshore wind evidence and change programme, which includes several initiatives to consider and support the fishing industry. I will give two examples. The first is the fisheries sensitivity mapping and displacement modelling project, which identifies areas of offshore wind development that present risks to the fishing industry to try to reduce the likelihood of conflicts between the two sectors. The second example is the ecological effects of floating offshore wind research programme, which focuses on understanding how marine ecosystems will react to the planned large-scale expansion of floating offshore wind in UK waters over the next decade. The goal of this programme is to change the way the Crown Estate deploys floating offshore wind on a large scale, ensuring nature recovery and enabling co-existence with other sea users, including fisheries.

Amendment 37C would prohibit the Crown Estate from granting new licences to access the seabed unless it has considered the impact of those licences on coastal communities. Coastal communities are already a primary consideration of any investment decision by the Crown Estate. For example, it has 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, more 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.

We could of course make this an explicit duty for the Crown Estate in legislation, but if we did that then there are many other points we have debated today that could also be added as statutory duties. As I said earlier, a key purpose of the 1961 Act was to repeal various detailed statutory provisions that had built up over 150 years previously, to avoid the Crown Estate having to work through a maze of requirements for each investment decision.

I turn next to Amendments 15, 17 and 29, tabled by the noble Lord, Lord Holmes, and the noble Earl, Lord Russell. These amendments seek to create new objectives for, or impose new duties on, the Crown Estate. Specifically, Amendment 15 would require the Crown Estate to seek to prioritise the objectives of UK food security and to support the development and promotion of new technologies, including artificial intelligence, in the managing and turning to account of Crown Estate land.

Amendment 17 would require the commissioners to publish a review assessing how Crown Estate assets can be deployed to support nature prescribing. The amendment would also require the commissioners to work with NHS England and devolved counterparts to enable the Crown Estate’s nature assets to form part of a major UK-wide nature prescribing scheme.

Amendment 29 would require the commissioners, when exercising their duty in Section 1(3) of the 1961 Act, to act in a way best calculated to further the achievement of sustainable development and to seek to manage assets in a way likely to contribute to the promotion or improvement of economic development, regeneration, and social and environmental well-being.

Before I speak to these amendments it is worth reiterating that the Crown Estate is a commercial business, independent from government, that operates for profit and competes in the marketplace for investment opportunities, yet it is currently restricted in its ability to do so. As I have already set out, the Government believe that it is right that the Crown Estate continues to operate as a commercial enterprise. A key purpose of the 1961 Act, as I have noted, was to repeal various detailed statutory provisions that had built up over 150 years previously, which were hampering the effective management of the estate. Since then, the Crown Estate has shown itself to be a trusted and successful organisation with a proven track record in effective management. That is a valuable outcome, which I stress we need to be careful not to undermine.

This track record includes its commitment to enable the development of new net-zero technologies and to invest in artificial intelligence to enhance its habitat and environmental monitoring system. The Crown Estate has also made it clear that it is prioritising food security alongside nature recovery and enabling the diversification of income for its tenant farmers. The investment and borrowing powers proposed in this Bill will allow for even greater investment in these areas by the Crown Estate.

The Government believe that the Crown Estate’s existing duties give it a clear focus, leading to a consistently significant return to the Exchequer to support the funding of public services. At the same time, the Crown Estate is already able to, and does, focus on activities which also closely align with wider national needs, including energy security and sustainable economic growth. As a public body, the Crown Estate seeks to work with the grain of prevailing government policy.

I turn next to Amendments 25 and 30, tabled by the noble Earl, Lord Russell, and the noble Baroness, Lady Hayman. Amendment 25 would create a new duty for the Crown Estate commissioners in the exercise of their functions to take all reasonable steps to contribute to the achievement of targets under Part 1 of the Climate Change Act 2008; the achievement of biodiversity targets under Sections 1 to 3 of the Environment Act 2021; and to adapt to any current or predicted impacts of climate change as identified in the most recent report under Section 56 of the Climate Change Act 2008. This amendment would also require the Crown Estate to include conditions in all seabed leases for the leaseholder to contribute to the conservation and enhancement of the natural environment.

Amendment 30 would create a new nature recovery duty. This would require the Crown Estate to take steps to embed nature into spatial planning and seabed leasing, allocate space for nature recovery in all projects and invest in clean energy projects.

Before I explain the Government’s position, let me express strong support for the intention behind these amendments. It is right that the public and private sectors make every contribution they can to help achieve our climate change targets, and the Crown Estate should continue to be a national trailblazer in this regard. The Crown Estate has committed to becoming a net-zero carbon business by 2030, aligning with the 1.5 degrees trajectory, and will prioritise activities which help enable a reduction in national carbon emissions, such as building net-zero homes, transitioning its holdings to sustainable agricultural practices and working in partnership with government to meet the national renewable energy targets.

On the biodiversity targets in the Environment Act, the Crown Estate is committed to delivering a measurable increase in biodiversity by 2030. It will publish its delivery plan to meet this goal next year, which will include commitments to restore habitats in line with targets in the Environment Act. As I have already noted, all leases granted by the Crown Estate for development that affects the seabed already require the leaseholder to have the necessary statutory consents in place before development can begin.

The Crown Estate also published its approach on nature recovery last week, where it has committed to delivering increased biodiversity, to protect and restore freshwater, marine and coastal systems, and to increase social well-being benefits from nature. However, as I have already set out, the reforms being introduced in this Bill are not intended to alter the fundamental statutory basis of the Crown Estate as a commercial business independent from government.

The commissioners operate under a clear commercial objective, as set out in the 1961 Act, to maintain and enhance the value of the estate. I know that some noble Lords take a different view as to how the Crown Estate should operate, but it is the Government’s view that the existing statutory commercial focus, coupled with adherence to environmental and other nature requirements as set out in other legislation, as well as the need in the 1961 Act for the commissioners to have due regard to the requirements of good management, remains the best approach. One of the functions of the Crown Estate is to return its profits to the Exchequer each year, and it has returned a combined total of more than £4 billion in the last decade. This is used to fund the priorities of the Government of the day, which currently include spending on policy that helps achieve our climate change goals.

The more the Crown Estate’s core purpose in legislation is expanded, particularly with additional duties or objectives that may unnecessarily complicate, conflict with or risk compromising the achievement of that core commercial objective, the harder—

--- Later in debate ---

[Lord Livermore (Lab)]

I thank my noble friend for that intervention. With the greatest respect, it is not a lack of understanding; it is just a slight difference of opinion. As I said, I have great sympathy with the motives underlying this amendment, but the Government would seek to achieve them in a slightly different way from my noble friend.

[Lord Teverson (LD)]

I am very grateful to the noble Lord for giving way; I will make one final intervention. I welcome very much what he said about biodiversity and the wish to do that, but he has not mentioned biodiversity net gain. It is a government policy to introduce marine biodiversity net gain. Will that apply? As one of the co-developers to the Crown Estate, will they be responsible for that when they implement that policy?

[Lord Livermore (Lab)]

I will be completely honest and say I do not know the answer to that question. I will find out and let the noble Lord know.

I hope these explanations have been helpful and that the noble Lords, Lord Holmes, Lord Teverson and Lord Young, the noble Earl, Lord Russell, and the noble Baronesses, Lady Hayman and Lady Young, will feel able not to press their amendments as a result.

Crown Estate Bill [HL]

Lord Teverson Excerpts

Committee stage
Monday 14th October 2024 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, it is a pleasure to introduce this group of amendments. In moving Amendment 16, I will give a nod to the other amendments in the group.

This amendment is incredibly straightforward; it simply seeks to assert that generation must match grid capacity and that we should always consider, when moving to these new modes of generation, who pays and when. I say that generation should match grid capacity, but perhaps that should be put the other way around to make the point that grid capacity must be in place before generation, particularly from offshore wind, comes on stream. I would welcome the Minister’s response as to what is currently set out in the Bill to guarantee that grid capacity will be in place and that we will not have a situation whereby there will be surplus generation that is unable to be taken up by the grid and is still paid for and unused—and that pay comes from the energy customers themselves.

How will it be ensured, as we move to this right green transition for energy production, that where the costs fall does not have catastrophic consequences? Presently, it seems unclear in the current structure of the Bill how this grid connectivity and capacity will come online to match the potential race for supply, particularly from offshore.

Amendment 16, in simple terms, would ensure that grid capacity exists before generation can come onshore and, in that, would ensure that payment is spread fairly across the bill payers—and that those at the sharpest end do not feel the most extreme cost as a result of this transition, as often happens. I beg to move.

[Lord Teverson (LD)]

My Lords, I shall be brief. I actually want to say something quite positive about the Government’s approach to this at the moment. I understand the issue completely: offshore wind is a complete waste of time if you cannot connect it to the consumers. That is obvious, and it has not been managed well. I very much welcome the Government’s commitment to achieve that in future, but we had on 1 October the foundation of the National Energy Systems Operator, whose whole role is to make sure that this works. When we passed the Energy Bill that set this up, we did not really give it enough power. It would be very good to hear from the Minister that that will be in progress and will actually happen.

Secondly, there is so much at risk for offshore developers. Yes, they can get their contract, their lease and their contract for difference in terms of the price for the low-carbon company. But at the end of the day, if developers do not believe that there is going to be a grid connection, they will not carry out their investment, so it is absolutely in everybody’s interest that we do this. A really good point has been made to the Minister, and I look forward to his assuring us that NESO— the new organisation from 1 October—will have some clout in government decision-making and will co-ordinate this effectively. It needs to have the power and influence to do so, rather than simply being an advisory organisation whose recommendations are ignored because of other private or public finance investment reasons.

[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.

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Moved by

[Lord Teverson]

27: After Clause 2, insert the following new Clause—
“Offshore wind developments: regional wealth funds(1) 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. (2) The Commissioners must agree regional boundaries of the regional wealth fund in consultation with local government.(3) 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.(4) The Secretary of State must by regulations set the percentage of the license fee which must be given to a regional wealth fund under subsection (1).(5) A statutory instrument containing regulations under subsection (4) 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 Crown Estate to ensure all leases for offshore wind power developments contain an agreed percentage that is contributed to a regional wealth fund. The money from this fund would be distributed to local communities.

[Lord Teverson (LD)]

My Lords, I make it clear that this is very much a probing amendment. I am trying to find out the Government’s attitude to how regions benefit from the development of offshore wind power.

We have a number of precedents here. We now have onshore wind development, which I very much welcome and which the Government are effectively permitting. Under the previous rules, it was almost impossible in England for onshore wind developments to take place. But it was made clear in very strong guidance that there had to be community benefit from onshore wind. It is very obvious that this is possible and not very difficult to do. A wind turbine or farm is planted in a particular location terrestrially in England, so it is quite obvious which communities are affected: the parishes around it. There is an onshore wind turbine just down the road from me, and two parishes benefit annually from part of that revenue stream. That works out really well; it is important and valuable, and, to a degree, it makes that generation part of the community’s effort towards the local economy. For those who do not particularly like wind turbines—there are not many of them in my local area—this is, if you like, a compensation and a way in which the local authority is rewarded.

Outside England, up in the most northerly parts of the British Isles, we have Shetland, which has its own wealth funds that came from the oil exploration. A very good deal was done by the local authority back in the 1970s, which I think ran out in 2000; it is not so good at the moment. Its wealth funds are related to a local authority, based on the oil development from around the Shetland waters. Again, it is fairly obvious geographically where those benefits should go. There is that precedent—and that system, with some warts, has worked relatively well.

Clearly, the major development of wind technology in future and at present is on the waves. Some of that is going out, such as the Celtic Sea floating offshore wind development. Those developments will be very large. However, even if they are beyond the horizon, which some of the floating offshore wind developments are, those regional communities are still affected by those developments because, as was pointed out on the last group of amendments, we need grid connections that land somewhere on the UK’s shore.

My proposition is that, given the consistency of policy here, there is an imperative and social justice in rewarding regions that have offshore wind coming into them because of developments away in their marine area. To be equitable both for regional communities and of easing the legitimacy of those offshore wind installations, there needs to be payback to those regional communities.

In this amendment, I have put some very general ways in which that would work. Clearly I have no expectation that the Government will copy and paste that into this Bill in future, even if the Minister thought that it was a brilliant idea—which I am sure he does. What I would like to understand from the Government is whether this is a way forward that they see as possible. How should that happen? Would the Government, the Minister and his officials work with us from these Benches to see how such a system could work? I beg to move.

[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.

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[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.

Amendment 27 withdrawn.

Crown Estate Bill [HL]

Lord Teverson Excerpts

Committee stage
Tuesday 22nd October 2024 Lords Chamber

[Lord Teverson (LD)]

My Lords, I want to make a very brief intervention on the amendment in the name of the noble Earl, Lord Leicester, and I would like some assurance from the Minister on some important points that the noble Earl made.

One of the points the noble Earl made was that we need to look at offshore developments not one by one in sequence but holistically. We are moving now into new waters with floating offshore wind; I am particularly aware of the Celtic Sea development, but obviously there is also floating offshore wind further out in Scottish waters. I would very much like an assurance from the Minister that, before those developments take place, in terms of actual building and specific location, there will be an overall environmental assessment for the whole of the future developments as opposed to each one individually. We want to understand the total effect rather than those individual effects.

We also need to consider the issues around the landing of those electric cables and all the infrastructure. In the North Sea, we have had the issue of a spaghetti of energy cables coming into various places all around it, and now, far too late, we are looking at trying to change that into a rational grid where we can have greater interdependence and greater trading but also fewer landing areas in terms of environmental damage.

In an earlier group, I raised the issue of a potential conflict of interests between the Crown Estate wanting to have offshore wind and therefore doing its own environmental assessments for these developments to be oven-ready—to use that phrase so badly used in the past. I very much wish to be assured by the Minister that there will be that global view of future areas of development, particularly of floating offshore wind, rather than doing it piecemeal in the ineffective and rather damaging way that we have done in the past.

[Lord Roborough (Con)]

My Lords, I thank my noble friends Lord Forsyth of Drumlean, Lord Douglas-Miller and Lord Leicester for these important amendments. I first declare my interests as set out in the register as the owner of fishing rights in both Devon and Sutherland, as a developer and owner of renewable energy assets and as president of the South West Rivers Association.

Amendments 37 and 37G require the Crown Estate to take responsibility for the environmental impact of salmon and broader fish farming, as well as the welfare standards in those industries. This applies both to existing licensed salmon and fish farms as well as new applicants for licences.

We support sustainable farming of wild Atlantic salmon or any fish species when it is done with sufficient respect for animal welfare and with protection of the environment in mind. I agree with the noble Earl, Lord Kinnoull, and recognise that it is critical that fish can be farmed so a growing global population can continue to include fish within its diet without putting unsustainable pressure on wild fish populations. We also celebrate that the United Kingdom is one of the few places in the world that has ideal coastlines and sea conditions, and that the industry can bring much-needed jobs to parts of the country with limited employment opportunities. Its contribution to those communities is important. However, the salmon farming industry should not be at the expense of the wild population that spawned it and was already occupying this coastline and these river systems for millennia before farming began, or at the expense of equally valuable jobs in managing the rod and line fisheries or indeed historic salmon-netting rights.

This Bill and these amendments target only England, Wales and Northern Ireland. As we all fully understand, the Scottish Crown Estate has been devolved. However, it is hard to debate these amendments without acknowledging the damage that Scottish salmon farms have done not only to the west-coast-of-Scotland rivers but to English, Welsh and Irish rivers. Migratory patterns of salmon and sea trout are still not fully understood, but it is clear that fish travelling to these rivers also have to navigate open-cage salmon farms in Scottish waters.

To my knowledge, there is only one fish farm in UK waters outside of Scottish waters, and that is in Northern Ireland. While these amendments will capture that farm, we also hope and intend that they will provide that any future development of salmon farms in our waters, or indeed any other aquaculture, is done with much greater scrutiny of the environmental implications and with full accountability for any harm caused and with the highest standards of animal welfare.

As my noble friend Lord Forsyth and other noble Lords mentioned, the evidence against salmon farms for their impact on wild Atlantic salmon and other salmonids has been well laid out: they are a reservoir of sea lice that prey on passing salmon; they are a reservoir and breeding ground of disease and bacterial and fungal infections; and there is the long-term existential threat, as farmed species’ genetics increasingly diverge from wild, that interbreeding with the wild species by escaped fish has on their continued viability in the wild. I note that it is thought that 5,000 salmon escaped from the Northern Irish salmon farm earlier this year.

There are other environmental impacts that have also been discussed: the amount of wild fish that are caught solely to be processed for fishmeal and fish oil to feed farmed salmon; the dead zones created on the seabed; and the chemicals that are used to treat diseases impacting on local wildlife. In addition, lumpfish and five species of wrasse have been used since the 1990s as cleaner fish in the industry to eat sea lice. The lumpfish are also farmed, and the industry is moving to farming of wrasse as well. What environmental standards do these have, as well as animal welfare standards?

There are also significant welfare concerns for the farmed fish themselves, as expressed during this debate—exposure to predation from sea lice; images of hundreds of tonnes of dead fish routinely being taken out of these cages and disposed of by incineration, burial and other means; and the apparent overcrowding of these fish within the open-cage salmon farms.

As my noble friend Lord Forsyth mentioned, Washington state chose to ban open-cage Atlantic salmon farming in 2018, and British Columbia plans to shut all its open-cage salmon farming by next year. That is not what is suggested by these amendments, which would ensure that the Crown Estate environmental and welfare obligations are explicit and that the entity is held accountable for any environmental damage or welfare issues caused on its estate. Better practice is available in the world; there are better techniques for farming Atlantic salmon that could be brought into operation to mitigate and even eliminate many of the causes of damage. We understand that these are all likely to add to the cost of production, but why should our environment and our wild Atlantic salmon subsidise this industry? Surely we have learned our lesson from the impact of the green revolution on native bird species and river system health?