Crown Estate Bill [Lords]

Debate between Mark Pritchard and Darren Jones

2nd reading
Tuesday 7th January 2025 Commons Chamber

[Darren Jones]

I will make some progress.

The second objective of the Bill is to enable the Crown Estate to invest in capital-intensive projects more effectively. It does so by empowering the Crown Estate to reduce the size of the cash reserves it needs to hold, thereby expanding its ability to use its land and property assets far more efficiently.

[Mark Pritchard (The Wrekin) (Con)]

Let us be clear that this is a huge departure for the Crown Estate. The Bill basically allows it to go to the City and to raise capital based on its assets, most of which, as the Minister highlights, are property. As he knows, the sponsor Government Department for the Crown Estate is the Treasury, but investments go up and down. What if those investments go down? Who will be the guarantor for those liabilities? Will it be the taxpayer or the Crown Estate?

[Darren Jones]

I will come to a number of those points later in my speech. If I have not answered the right hon. Gentleman’s points as I get towards the end, I will take another intervention from him.

As a result of the changes in the Bill, the Crown Estate will be able to accelerate investment in redeveloping and decarbonising its Regent Street and historic London portfolio, as well as investing in projects to support science and innovation. The Bill will unlock potential investment of up to £1.5 billion in the science, technology and innovation economy over the next 15 years, building on the Crown Estate’s recent investment in the city of Oxford.

To reduce the size of its cash holdings and engage in more capital-intensive activity in the long term, the Crown Estate needs the ability to borrow, as its competitors currently can. Such borrowing will be from the Government or from other sources, but only with Treasury consent. Borrowing from the Government will be at commercial rates, meaning the interest the Crown Estate pays, funded from its own income, will outweigh the Government’s cost of borrowing the money they loan to the Crown Estate. This will enable the Crown Estate to build on its long track record of delivering significant revenues to the public purse year after year—it has delivered over £4 billion in the last decade.

[Mark Pritchard]

Is there not a potential conflict of interest? The Minister mentions GB Energy, a new national organisation introduced by Labour Government policy. Because of the Crown Estate’s partnership with the Treasury, the Government are encouraging the Crown Estate to invest in GB Energy, but what if people out there do not like that policy? What if GB Energy is a failure? It is there not a clear potential conflict of interest between the Crown Estate and the incumbent Government?

[Darren Jones]

The right hon. Gentleman is doing a brilliant job of anticipating sections in my speech. Once again, I will point at him when I come to the relevant section; in fact, it is the next section, so he is in luck.

There will be a memorandum of understanding in place between the Treasury and the Crown Estate that will govern how the borrowing powers will be exercised. Above all, the Crown Estate will be borrowing for investment, maximising the profits returned to the public purse. Any such borrowing will require Treasury consent and will be within our fiscal rules.

Given that the new powers will enable the Crown Estate to first draw on its cash holdings, it is not envisaged that these borrowing powers will be used until the end of the decade. As with any public sector borrowing, the Treasury will ensure that this is consistent with “Managing Public Money” principles to ensure value for money for the taxpayer. The fiscal impact of any Crown Estate borrowing will be fully considered, starting with this year’s spending review, to ensure it is consistent with our fiscal rules.

The Bill contains a set of necessary reforms, ensuring that the two key objectives can be met and that the Crown Estate can continue to operate effectively, both now and in the years ahead. It is composed of five key elements. First, it widens investment powers by removing existing restrictions on investing in the current Crown Estate Act 1961, and clarifies the Crown Estate’s ability to invest in complementary activities, such as research, digital technology and energy supply chains. Secondly, it grants the Crown Estate the power to borrow with Treasury consent. As well as generating returns for the public purse, the new ability to borrow will free it up to make better use of its existing assets, leveraging these to give it more room to invest.

Thirdly, the Bill makes amendments relating to the governance of the Crown Estate to provide legislative simplification and to bring it in line with best practice for modern corporate governance. By expanding the number of commissioners, the board will be able to better reflect the growing breadth of the Crown Estate business and ensure a greater range of expertise and diversity at board level. The Bill also requires the appointment of commissioners to advise on Wales, England and Northern Ireland, which will ensure that the board continues to act in the best interests of the areas in which it operates.

Fourthly, the Bill requires the commissioners to keep under review the impact of their activities on the achievement of sustainable development goals in the UK. It is important that progress towards national goals on the environment and climate, as well as wider considerations on society and the economy, continue to be at the core of the Crown Estate’s strategy.

Fifthly, the Bill requires the annual report to include a section on the activities of the commissioners under their recently announced partnership with Great British Energy. That will ensure that details of the partnership and the benefits it creates are publicly available, clear to all and subject to debate in this House when those reports are published.