Crown Estate Bill [Lords]

Matt Rodda Excerpts

Report stage
Monday 24th February 2025 Commons Chamber

[James Wild]

We are dealing with the Bill in front of us today. To do so at the moment would be too complex for the licensing reasons and other reasons set out in Committee, which could undermine the returns that would be made for taxpayers, whether in Wales or other parts of the country.

The hon. Member for Mid and South Pembrokeshire spoke to amendment 5, a version of which was moved in Committee on his behalf. We recognise that the amendment has been revised. However, as I said in Committee, we are cautious about putting more obligations on the Crown Estate than clause 3 already does; there is danger of the overreach that he spoke about. I am sure he will be listening to the Minister’s speech with some interest.

The kernel of the Bill is the expansion of the power of the Crown Estate to borrow, but there is a lack of parliamentary oversight on borrowing levels. Amendment 4, which appears in my name, would limit borrowing to a net debt-to-asset value ratio of no more than 25%, which could be amended by affirmative regulations. That would, I believe, be a proportionate check on this new borrowing power. When pushed in Committee, the Government again stated that limits on borrowing are best set outside legislation in a memorandum of understanding, but a memorandum of understanding is all too easily altered at the stroke of a pen—a point the Minister did not address in Committee. Will he give an undertaking, at the very least, that any changes to a memorandum of understanding would be reported to Parliament?

Given that Parliament is being asked to remove the restriction on borrowing and that the Government agree there should be a limit, I struggle to see why the cap should not be set in legislation, with the ability to amend it. Borrowing more than 25% carries risk, which could ultimately affect the sustainability of the estate. That is why the Government themselves have accepted that there should be a limit. As this new power affects assets held on behalf of the nation, it should be subject to control. This would be a perfectly reasonable check, and I hope Members will back it.

New clause 5 would require the Crown Estate to seek Treasury approval for disposals amounting to 10% or more of its total assets, and then to lay a report before Parliament. Disposal of assets has been an important part of the discussions throughout the proceedings on the Bill, both here and in the other place. Indeed, clause 5 was introduced after pressure to require Treasury consent before disposing of any of the Crown Estate’s rights or privileges in relation to the territorial seabed. That is a welcome safeguard, but can the Minister conceive of any circumstances in which the Government would approve of such a sale? Can he give a commitment that national security would be at the fore in any consideration of such a proposal? Would Ministers come to the House before agreeing to any such disposal?

In Committee, the Minister stated that the current process dictates that the Government will be consulted on any potential sale of a nationally significant asset. How does he define nationally significant? He also argued that requiring Treasury consent for large disposals would undermine the flexibility that the Crown Estate needs to operate commercially, but the proposed new clause simply requires Treasury consent to be sought and then reported to Parliament. The Crown Estate will not suddenly decide tomorrow to dispose of an asset; it will go through its internal processes and business cases. A version of those papers could be provided to Ministers and, depending on the Ministers, there could be a very rapid approval process that does not compromise flexibility but ensures accountability. These assets are held for the benefit of the nation, and we should ensure some form of transparency and scrutiny.

New clause 6 would require the Chancellor to lay before Parliament any partnership agreement between the Crown Estate and GB Energy. That is fundamental, as without being able to see details of the agreement, we do not know what has been agreed. There is a lack of clarity over how this new partnership will work. We are still concerned that it has been created for political rather than economic reasons. The Opposition are sceptical about what the Government say about GB Energy, because during the election Labour claimed that GB Energy would cut energy bills by £300, but bills are going up. The chairman of GB Energy has refused to say when people can expect £300 off their energy bills. We know that GB Energy will spend £8.3 billion of taxpayers’ money, but will not generate any energy, be an energy supplier or save families £300.

We are concerned that at all stages the Government have resisted greater transparency. When pushed on Second Reading and in Committee, the Exchequer Secretary said that while the partnership agreement itself will not be published since it will be commercially sensitive, the Crown Estate is committed to publishing information relating to the partnership as part of its existing annual report. However, the provisions to include that in an annual report could result in a considerable lag after such an agreement becomes operational and in only limited detail being published. Frankly, that is not good enough, which is why we have tabled new clause 6.

Transparency is important because we do not know how much the Crown Estate may invest in GB Energy’s projects. We do not know what level of funds from this borrowing power could be used for that purpose. When I asked the Crown Estate how it would decide between projects that GB Energy favours and others that may have a higher rate of return, I was told that there would be a business plan for the partnership. That shows a further lack of transparency, as I assume the Minister will not place that before the House. I also asked about decision making for the partnership, and the response was:

“The intention is that both parties will seek agreement on investment decisions whilst retaining their own independence. The Crown Estate will not be compelled to agree to anything which it does not wish to agree to in fulfilment of its statutory duty.”

I note the use of “intention” and “compelled”.

There is a lingering concern that Ministers may pressure GB Energy and the Crown Estate to invest in the Energy Secretary’s pet projects. Clearly, the chairman of GB Energy is very close to the Labour party, and nominating a Labour party donor as the chairman of the Crown Estate adds to this concern. Publishing the agreement could help allay concerns about the Government’s intentions.

If the Minister contends that the agreement, which does not yet exist, is too commercially sensitive, will he consider making a redacted version available? As I said in Committee, will he consider providing the agreement to the Public Accounts Committee on a confidential basis? As a former member of that Committee, I know of a precedent for that: in January 2018, the Cabinet Office provided a risk register of strategic suppliers to Government—a very sensitive document—to that Committee, which provided assurance on behalf of the House. I remain concerned about political pressure being put on the Crown Estate and urge Members to support our new clause 6, which would simply require the Chancellor to lay the partnership agreement before Parliament.

The Crown Estate Bill will deliver the modernisation of the Crown Estate. Our amendments and new clauses would ensure appropriate oversight and transparency as it delivers on its primary duty to maintain and enhance the value of the assets and the return for taxpayers.

[Matt Rodda (Reading Central) (Lab)]

It is a pleasure to contribute this evening. I will speak in favour of the Bill and address some of the amendments and new clauses, although there probably is not time to address them all. The Bill is an important and necessary step to help the Government take speedy action to tackle the climate emergency, and to help ensure energy security. It modernises the management of the Crown Estate, as we have heard, which potentially is a sleeping giant of green energy provision. The estate is responsible for vast amounts of coastal land and seabed, which have enormous potential to deliver wind power and other renewables.

Tackling the climate emergency is a significant challenge, but it is achievable. However, we need to step up to the challenge, and the Bill is part of a wider transformation of Government policy to do exactly that. As we heard in Committee, the Bill is urgently needed because although the Crown Estate has enormous potential, the rules governing its management are unduly restrictive. For example, the Crown Estate Act 1961, which governs the estate’s management of its resources, sets out rules that would now be deemed inappropriate for holding very large cash balances. That makes it difficult for the Crown Estate to work with private investors to develop new wind energy and to transmit urgently needed new power to the grid. There is a clear need for these measures. I hope that, after sufficient debate, it is time for the Bill to make further progress.

I would like to support the Minister by briefly pointing out the inherent errors of some of the new clauses and amendments. New clause 5 seeks Treasury approval for the disposal of more than 10% of the Crown Estate’s assets. Clearly, that would reduce flexibility for the Crown Estate in managing its estate and business. New clause 6 would require the Chancellor to lay any partnership agreement between the Crown Estate and GB Energy before Parliament. However, as we have heard, partnership agreements are normally commercially sensitive, and there could be a risk to further business if that was carried out.

Let me turn briefly to the amendments. Amendment 3, which in my opinion is misconstrued, would require the commissioners to assess the adequacy of protections against coastal erosion in areas affected by their offshore activities. However, the UK already has a whole series of dedicated statutory bodies in each of the devolved Administrations that are tasked with exactly that activity.

Equally, amendment 5 is unnecessary. It would ask the Crown Estate when reviewing the impact of its work to consider the impact on net zero targets, regional economic development and energy security. However, it is clear that the whole Bill is intended to tackle the challenge of addressing and eventually reaching net zero. Referencing specific targets risks further complicating what is already an important Bill that has had considerable discussion in Committee.

As my right hon. Friend the Chief Secretary said at an earlier stage, this is an important Bill to help the UK achieve our climate targets, and it is a significant step forward in helping us retain energy security. It is time for the whole House to support it.

[Madam Deputy Speaker (Judith Cummins)]

I call the Liberal Democrat spokesperson.