Crown Estate Bill [ Lords ] (First sitting)

Noah Law Excerpts

Committee stage
Thursday 6th February 2025 Public Bill Committees

[James Murray]

With your permission, Ms Furniss, I will briefly add to the comments that I made in the previous debate, because the shadow Minister asked about the appointment of the chair. On 23 December, the Government announced Ric Lewis as our preferred candidate for chair of the Crown Estate. The Government also confirmed that the appointment would be subject to a parliamentary pre-appointment hearing. Under paragraph 9.2 of the governance code on public appointments, political donations should be publicly disclosed if the successful candidate has made a significant donation or loan to a party in the last five years. That will happen if the appointment is confirmed, following the Treasury Committee’s report, and a subsequent announcement is made. Thank you for your patience, Ms Furniss.

Amendment 1, which was tabled by my hon. Friend the Member for Mid and South Pembrokeshire (Henry Tufnell), and to which other hon. Members have spoken, would require the Crown Estate commissioners, in reviewing the impact of their activities on the achievement of sustainable development, to have specific regard to the UK’s net zero targets, to regional economic growth and to ensuring resilience in respect of managing uncertainty, risk and national security interests. I was glad to meet my hon. Friend on Tuesday to discuss the amendment. The Government understand the motive behind it, but it is important first to set out the context for clause 3. I will be brief, as I realise that we will debate clause 3 stand part later.

The Government and the Crown Estate welcomed the addition of clause 3 on Report in the other place, as a clarified and enhanced accountability on the Crown Estate to deliver environmental, social and economic outcomes. The Crown Estate is already a trailblazer in its efforts on tackling climate change and supporting the environment, which I will address in more detail later. Clause 3 will require the commissioners to keep under review the impact of their activities on the achievement of sustainable development in the UK. It is important to note that the public framework document that governs the relationship between the Crown Estate and the Treasury will be updated in the light of clause 3 to include a definition of sustainable development and to confirm that the Crown Estate will continue to include specific information on its activities in its annual report.

The Crown Estate Act 1961 established the Crown Estate as a commercial business, independent from Government, that operates for profit and competes in the marketplace. It is analogous to a private sector commercial operator. The commissioners operate under a clear commercial objective, as set out in the Act, to “maintain and enhance” the value of the estate. At the same time, the Crown Estate can and does focus on activities that closely align with wider national interests, including on the environment, net zero, our nation’s energy needs and sustainable economic growth. As a public body, the Crown Estate seeks to work with the grain of prevailing Government policy.

In addition to its core commercial objective, the Crown Estate operates under a duty in the 1961 Act to have

“due regard to the requirements of good management.”

This obliges the Crown Estate to maintain and enhance the value of the estate responsibly. Good management practices include maintaining a strong governance structure, adhering to best practices in risk management, and fostering a culture of accountability and transparency.

It is important for the Bill to stand the test of time as new, relevant areas of concern on the environment, society and the economy emerge over the coming decades. These currently include net zero and regional economic growth, which are given regard by the Crown Estate and should be covered in its annual report. The general term “sustainable development” was chosen because it is broad and captures the widest range of relevant concerns across the environment, society and the economy, now and as priorities in those areas evolve over time.

[Noah Law (St Austell and Newquay) (Lab)]

I recognise that it might not be the place of statute to outline some of the specifics brought up by the amendment, but does the Minister agree that the spirit of the amendment is well in keeping with the mission of this Government and, moreover, that of regional economic development in particular, which spreads to all corners of Britain? That is important, and it is incumbent on the Treasury more widely to ensure that that takes place, particularly through the channel of supply chain development.

[James Murray]

My hon. Friend is absolutely right. A priority of the Government is to ensure not only that there is economic growth at a national UK level, but that all regions and nations of the UK benefit from such economic growth and the increase in productivity. We want to ensure that people right across the country are better off and have more money in their pocket through greater investment and growth in their local areas. He makes an important point.

To return to the definition of “sustainable development”, I will briefly address the point made about that by the hon. Member for South Cambridgeshire. I assure her that that definition will be published on Royal Assent of the Bill, at that point. It was, however, a deliberate decision not to specify specific targets or objectives such as net zero on the face of the Bill, given that the Crown Estate is already required to “maintain and enhance” the value of the estate responsibly. Referencing specific targets would risk complicating the Crown Estate’s existing clear commercial objective.

As I have already noted, the Crown Estate is required to pay its entire net profits to the UK Consolidated Fund every year, worth more than £4 billion over the past decade. That supports the UK Government’s spending on policy priorities, including net zero and, indeed, regional economic growth.

On national security interests specifically, it is important to be clear that the Government are responsible for ensuring that national security interests are managed effectively at a UK-wide level. It would not be appropriate to require the Crown Estate to have a specific regard in that matter. As I have noted, while the Crown Estate has goals under which its strategy can align with wider national policy objectives, the 1961 Act provides the Crown Estate with independence and autonomy. The Government believe that it should continue to operate in that way, as a commercial business independent of Government. This requirement would encroach on that independence by drawing the Crown Estate into interests managed directly by the Government.

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 and priorities. The duty to have due regard to the requirements of good management, alongside the new requirement to keep under review the impact of its activities on the achievement of sustainable development, are already sufficient to cover the concerns of my hon. Friend the Member for Great Grimsby and Cleethorpes. I hope that the amendment will be withdrawn.

I turn to amendments 6 and 8, tabled respectively by the hon. Members for Ynys Môn and for South Cambridgeshire. Amendment 6 would require the commissioners, in complying with proposed new subsection (3A) of the 1961 Act on sustainable development, to

“set and publish sustainable development objectives in relation to their activities…take all reasonable steps to meet these objectives, and…have regard to the relevant environmental legislation for the UK, England, Wales and Northern Ireland in relation to making these objectives.”

It would further specify that the relevant environmental legislation includes the Climate Change Act 2008, the Environment Act 2021, the Well-being of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016.

Amendment 8 would require any “framework document” published by the Chancellor of the Exchequer, the Crown Estate or the commissioners to define “sustainable development”, and that that definition include a reference to a “climate and nature duty”. It further specifies that such a climate change duty would mean a duty to achieve any of the targets set out under part 1 of the Climate Change Act 2008, or under sections 1 to 3 of the Environment Act 2021.

The Government understand the intention behind amendments 6 and 8, but a key purpose of the 1961 Act was to repeal various detailed statutory provisions that had built up over the 150 years previously, which were hampering the effective management of the estate. By focusing the commissioners’ duties on enhancing the estate’s value and the returns generated, the commissioners have a clear objective for which they can be held to account. It is an important principle that giving an organisation too many objectives will make it far less effective than giving it clear and focused priorities. As I have already noted, the Crown Estate is a commercial business, independent from Government, that operates for profit.

--- Later in debate ---

One thing we do know is that GB Energy will spend £8.3 billion of taxpayers’ money on an investment vehicle to derisk the profits of multimillion-pound energy companies. The consequences of this Labour Government’s approach to energy, and their drive to net zero by 2030 come what may, will prove very expensive for our constituents. Indeed, a report from Offshore Energies UK revealed that Labour’s policy in the North sea will reduce tax revenues from the sector by £12 billion, leading to tens of thousands of job losses as well. GB Energy will not generate any energy, it will not be an energy supplier and it will not save families £300 off their bills.

[Noah Law]

Does the hon. Member not welcome the potential proceeds of great British energy projects that could be unlocked by this new entity?

[James Wild]

My point about the new clause is trying to get some transparency about what those proceeds might be. I do not whether the hon. Member can enlighten me as to from where they might be coming and which projects will be invested in, or how many jobs will be created. He might apply for the job of the chairman of GB Energy, because the current one does not seem to know the answer to any of those very important questions. We are being asked to legislate to support a partnership between the new entity of GB Energy and the Crown Estate, so I make no apology for seeking greater transparency.

When pushed on Second Reading, the Minister confirmed:

“Although the partnership agreement itself will not be published, given that it will be commercially sensitive”—

I think he said “very commercially sensitive” this afternoon, or “highly”—

“the Crown Estate has committed to publish information relating to the partnership as part of its existing annual report.” —[Official Report, 7 January 2025; Vol. 759, c. 806.]

But at all stages of the Bill’s passage and in the amendments that have been tabled, the Government have had to be pressured to be more transparent. Given that the Bill makes significant changes to the operation of the Crown Estate and reduces parliamentary oversight, I do not see why Parliament should not have sight of an agreement. It is simply not good enough to hide behind excuses of commercial confidentiality.

If the Minister is genuinely concerned about the conservative nature of this—[Laughter.] He probably is! I should have said: if the Minister is genuinely concerned about the commercially sensitive nature of the agreement, perhaps a redacted version could be laid before Parliament, for example, or the full version could be provided to the Public Accounts Committee. I had the pleasure to serve on that Committee for over two years, and it was not uncommon for similar agreements to be provided in confidence to the Chair and the Committee to give assurance, on behalf of other Members of the House, that this was a bona fide commitment that did not need to be drawn more widely to public attention, noting the strictures there may be about commercial confidentiality.

I have spoken to the current Chair of the Public Accounts Committee, my hon. Friend the Member for North Cotswolds (Sir Geoffrey Clifton-Brown), about this, and he would be very happy to receive a copy of the partnership agreement and continue to operate—as he has done over a decade or more as deputy Chair—by recognising and respecting confidentiality and the basis on which it is provided. It would provide assurance for all Members of the House that one of the pre-eminent Committees of the House has oversight of the agreement. If the Minister is not minded to agree to our new clause—I detect that he is not—perhaps he will look at the feasibility of a taking a redacted version of the agreement, or a similar approach, to the Public Accounts Committee.

In advance of this Bill Committee, I wrote to Dan Labbad, chief executive of the Crown Estate, to seek clarity on the partnership agreement. I am grateful that he took the time to respond. I asked whether the Crown Estate is planning to agree to invest a certain amount with GB Energy. His response was:

“Any arrangements the Crown Estate enter into with GBE will be expressly subsidiary to our statutory duty to maintain and enhance the value of the estate, but with due regard to the requirements of good management…We will ensure that the Crown Estate continues to deliver on our wider obligations”.

Can the Minister confirm that the Crown Estate’s statutory duty will always have primacy? Without the agreement being laid before Parliament, we will not have the transparency to see whether commitments have been given, and to judge and assess whether they meet the criteria.

I also asked Dan Labbad how the Crown Estate will decide between projects that GB Energy backs and other projects that may have a higher rate of return. I note the comments from the hon. Member for St Austell and Newquay, but it may be that the Crown Estate could identify non-GB Energy projects that may generate a greater return for the taxpayer and our constituents. In that case, it should be investing in those, not a political project under the Energy Secretary. Dan Labbad said:

“The Crown Estate will have a clear business plan in relation to the partnership… The consideration of which projects fulfil that business plan will take into account our statutory duty to maintain and enhance the value of the estate…and the obligation upon the Crown Estate to secure the best consideration, having regard to all the circumstances of the particular case at the time.”

“All the circumstances” is rather broad, and “take into account” could be seen as rather weak. Can the Minister confirm whether he has seen a copy of any such business plan? Would he expect to? I fear the answer will be no, but would he be prepared to lay a copy of it before the House so that Members can scrutinise it?

Finally, I asked Dan Labbad about the new division’s decision-making process, because the new clause is about trying to get underneath the bonnet of the agreement. He said:

“The Crown Estate’s agreement with GBE is such that activity undertaken through the partnership will not undermine the Crown Estate’s independence. 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.”

“Compelled” is a very strong word to use in that context.

On one level, the responses could be seen as reassuring, but I think back to the exuberant press release I referred to earlier and the excitement in the announcement of what the partnership could deliver and what the Government thought it could do. Can the Minister clarify how much he expects the Crown Estate to invest in the Energy Secretary’s personal investment fund? Can he rule out Ministers pressuring the Crown Estate, whether that be through GB Energy and the chairman they have appointed or the chairman of the Crown Estate, who will shortly be going before the Treasury Committee? Can he rule out pressuring any of those people to invest more than the Crown Estate considers to be prudent?

I have raised my points briefly. I could go on for longer, though I am not sure the Committee would enjoy that. We are asking reasonable questions about this “groundbreaking partnership” agreement—I am looking at the exciting press release in front of me. It is incumbent on the Minister to provide some clarity and assurance on this—and I hope, having listened to the argument, accept that it is not unreasonable to place before Parliament a partnership agreement that can be redacted and before the Public Accounts Committee the full agreement. I look forward very much to the Minister’s response.

Ordered, That further consideration be now adjourned. —(Christian Wakeford.)