Crown Estate Bill [ Lords ] (Second sitting)

Perran Moon Excerpts

Committee stage
Thursday 6th February 2025 Public Bill Committees

[James Murray]

I thank the hon. Lady for that question, but we must consider the proposal before us in terms of the situation we face now, rather than consider decisions that have been made in relation to another nation in the past. We are considering not only the challenges but the opportunities for generating renewable energy in connection with assets closer to Wales or closer to England. The Government believe that having a united approach, through retaining the Crown Estate’s current form, is the best way to improve lives for people in Wales and across the rest of the UK.

As I was saying before the hon. Lady intervened, our reforms aim to create a more efficient system and reduce the waiting times for generation projects to connect to the grid. I am sure she would not want to see those waiting times increase. The cumulative impact of the changes that she and the hon. Member for South Cambridgeshire are suggesting in their new clauses would likely significantly delay the pathway to net zero.

Furthermore, the Crown Estate’s marine investments are currently made on a portfolio-wide basis across England and Wales. To devolve to Wales would disrupt the existing investments, since they would need to be restructured to accommodate a Welsh-specific entity. To devolve the Crown Estate at this time would risk jeopardising the existing pipeline of offshore wind development in the Celtic sea planned into the 2030s. The Crown Estate’s offshore wind leasing round 5 is spread across the English and Welsh administrative boundaries in the Celtic sea. It was launched in February last year and is expected to contribute 4.5 GW of total energy capacity, or enough to power 4 million homes.

In addition to energy, the extensive jobs and supply chain requirements of round 5 will also likely deliver significant benefits for Wales and the wider UK. Lumen, an advisory firm to the Crown Estate, has estimated that manufacturing, transporting and assembling the wind farms could potentially create around 5,300 jobs and create a £1.4 billion boost for the UK economy.

Devolution would also delay UK-wide grid connectivity reform. The Crown Estate is using its data and expertise as managers of the seabed to feed into the National Energy System Operator’s new strategic spatial energy plan. For Wales, the Crown Estate is working in partnership with the energy system operator to ensure that its current pipeline of Welsh projects, the biggest of which is the round 5 offshore wind opportunity in the Celtic sea, can benefit from this co-ordinated approach to grid connectivity up front. It would not make commercial sense to introduce a new entity, with control of assets only within Wales, into that complex operating environment, where partnerships have already been formed. Furthermore, the Crown Estate’s assets and interests in Wales, as compared with its assets in England, are of a fundamentally smaller magnitude, which would likely not be commercially viable if the costs were unsupported by the wider Crown Estate portfolio.

The Crown Estate, in its present form, has the ability to take a longer-term approach to its investments and spread the costs of those investments across its entire portfolio. A self-contained, single entity in Wales would not have the same ability, nor would it benefit from the expertise that the Crown Estate has developed over decades in delivering offshore wind at scale. A devolved entity would be starting from scratch, midway through a multimillion-pound commercial tendering process, at a time when the Crown Estate is undertaking critical investment in the UK’s path towards net zero.

For example, the commercial viability of all three 1.5 GW floating offshore wind project development areas in the Celtic sea, which straddle the English and Welsh administrative boundaries, benefited from the Crown Estate’s significant investment of time, expertise and capital to enable entry to market. UK floating offshore wind, which is an emerging offshore technology that the Crown Estate is supporting, would be particularly vulnerable to market disruption.

It is also important to underline that income generated by the whole Crown Estate benefits the people of Wales. As I have noted, the Crown Estate pays its entire net profits into the UK Consolidated Fund each year. That means that much of the revenues already support public services in Wales, either through supporting UK Government spending in reserved areas or through the funding provided under the operation of the Barnett formula and the Welsh Government’s block grant funding.

[Perran Moon (Camborne and Redruth) (Lab)]

On that point, does the Minister agree that a lot of the concern and anxiety expressed so far stems from the idea of huge opportunities for revenue generation by the Crown Estate passing through deprived rural coastal communities and going to the Treasury? Will he comment on how a place like Cornwall, which is not subject to the Barnett formula, will benefit from all the resources from something like the Celtic sea?

[James Murray]

My hon. Friend is absolutely right that a collective approach to projects such as those in the Celtic sea, which cross English and Welsh administrative boundaries, can increase a return for the UK Consolidated Fund, which benefits people in Cornwall, Wales and other parts of the UK. It ensures that we get the best return on our investment through Crown Estate activities. Our concern about the proposition in the new clauses is that it would undermine such revenue generation for all our public services, as well as disrupting the emerging market in offshore floating wind at a critical time, when what investors need is stability, certainty and confidence to invest in a growing sector, not organisational change that might undermine the investment they seek to make.

To pick up further the point made by my hon. Friend the Member for Camborne and Redruth, were Wales to benefit only from the income generated in Wales, it would likely receive zero or negligible benefits for several decades to come, because Welsh assets are relatively new and it will take them time to mature—in the order of 10 to 15 years. The Crown Estate has shown itself to be a trusted and successful organisation, with a proven track record in effective management and profit generation, which are valuable outcomes that we need to be careful not to undermine.

As I set out earlier, the Government supported the inclusion of clause 6, which will require the appointment of a commissioner responsible for giving advice about Wales. I will not repeat what I have already set out, but it is important to underline that that will help to ensure that the board of commissioners for the Crown Estate continue to work in the best interests of Wales, alongside their existing duties as commissioners. That will certainly strengthen the Crown Estate’s ability and mission to deliver benefits for the whole UK.

I am aware that hon. Members may not agree with the points I have made, but I hope that I have set out clearly why the Government believe the existing structure remains the best approach. I hope hon. Members feel able not to press their new clauses.