Crown Estate Bill [ Lords ] (First sitting)

Pippa Heylings Excerpts

Committee stage
Thursday 6th February 2025 Public Bill Committees

[James Wild]

It is a pleasure to serve under your chairmanship, Ms Furniss, and to get the Committee started this morning. The clause amends the Crown Estate Act 1961 to remove certain statutory restrictions on the commissioners’ powers, and it clarifies and expands those powers in certain respects. Specifically, it broadens the Crown Estate’s investment powers and confers a broader power to borrow, subject to Treasury consent.

As well as moving the amendment, I will speak to the clause. The Crown Estate Bill was conceived under the previous Government, and I am pleased that it has now progressed to this stage. We support the objective of the clause, which is to increase the Crown Estate’s ability to compete and invest, so that it maintains and enhances the value of the estate and the income derived from it.

As the Committee knows, assets managed by the Crown Estate are not the property of the Government, and nor are they part of the sovereign’s private estate. Since George III, the assets have been held in right of the Crown—in other words, they are owned by the Crown as an institution, not personally by the monarch. The concept of the Crown encompasses the interests of both the sovereign and the Government. That is why appropriate scrutiny of the Crown Estate is important. The Estate has assets worth £15.5 billion and a portfolio of 185,000 acres, and it manages roughly 7,400 miles of coastline. It is also the largest contiguous owner in the west end.

The Crown Estate returns all its net profits to the Treasury. In 2023-24, it recorded a net profit of £1.1 billion. Over the past decade, it has generated £4.1 billion for the nation’s finances, which is a laudable record, but there is the potential to do more. The Crown Estate estimates that the changes in the clause will enable it to generate £100 million per annum in additional revenues to the Treasury by 2030. That is forecast in the original business case that led to this legislation. It is therefore right that we should help to modernise the Estate as it aims to create lasting prosperity for the nation.

At present, the Crown Estate is limited to making investments in certain types of property and certain restricted types of security held on the Crown Estate’s behalf by the national debt commissioners. The Estate’s powers to borrow for the purposes of discharging or redeeming incumbrances affecting the Estate are very limited. The Bill will modernise the Estate by removing those limitations.

Although we support the borrowing power, we are concerned that there is a lack of parliamentary oversight over the borrowing levels. This is a new power. The Crown Estate should be prudent on the level of borrowing. The purpose must be supporting the Estate’s duty to maintain and enhance its value for maximised return to taxpayers. That is why we have tabled amendment 4, which would limit the amount the commissioners may borrow instruments. Specifically, the amendment would limit borrowing to a net debt-to asset value ratio of no more than 25% initially.

When pushed by Baroness Vere and other noble Friends in the other place, the Government stated that a limit on borrowing is better placed outside legislation and that controls would be set out in the memorandum of understanding between the Crown Estate and the Treasury. On Second Reading, the Minister repeated that, saying:

“There will, as has been noted, be a memorandum of understanding in place between the Treasury and the Crown Estate, and that will govern how borrowing powers will be exercised.”—[Official Report, 7 January 2025; Vol. 759, c. 805.]

The target borrowing level in that MOU sets out that the loan-to-value ratio should not exceed 25%. Given that the Government agree that there should be a limit, we should introduce robust safeguards in statute to protect against unconstrained borrowing. An MOU between the Treasury and the Crown Estate is easily altered at the stroke of a pen. If Parliament is being asked to remove the restriction to allow the Crown Estate to borrow, I struggle to see the logic in why the Government think that the cap they have committed to should not initially be set in legislation, with the ability to amend it by secondary legislation, if necessary. I would be grateful if the Minister could address those concerns and confirm whether the Government have considered this proposal since Second Reading.

A limit must be subject to the affirmative procedure, which is a proportionate step that will ensure that the Crown Estate can access that borrowing to maintain and enhance the value of its land, property, and interests for the benefit of the nation. However, borrowing can be risky, and this is a new power, so it should be subject to some controls and we should be cautious. I contend that amendment 4 is a perfectly reasonable check on the borrowing power, and I hope we can get the Committee off to a positive start, with the Minister accepting it.

[Pippa Heylings (South Cambridgeshire) (LD)]

Amendment 7 is similar to amendment 4, and is supportive of its essence. It is about introducing a sensible borrowing limit for the Crown Estate commissioners by capping their net debt-to-asset value ratio at 25%, with any change to that limit requiring parliamentary approval.

As we have just heard, clause 1 as it stands grants the Crown Estate significant new powers to borrow and access financial assistance from the Treasury. Although investment in the Crown Estate’s portfolio—particularly in areas such as offshore wind—is welcome, it is vital that we ensure fiscal responsibility and protect the long-term value of these assets for the nation.

Amendment 7 is about introducing proper safeguards. The Crown Estate manages over £16 billion in assets, and its revenues contribute directly to the Treasury and public finances. Without a clear borrowing limit, we could risk unchecked debt accumulation, which could ultimately undermine the Estate’s financial sustainability and reduce the returns it provides to the Exchequer. A 25% debt-to-asset ratio is a reasonable cap and allows for investment and growth, but prevents excessive leveraging that could put the Estate’s finances at risk. Crucially, the amendment also ensures parliamentary oversight. Any changes to the limit must be debated and approved by both Houses, rather than left solely to the discretion of the Treasury.

This is not about preventing the Crown Estate from borrowing; it is about ensuring that borrowing is responsible, transparent and aligned with the long-term interests of the nation. Given the Crown Estate’s unique status and the importance of its revenues to the public purse, it is only right that Parliament retains a say over any significant increase in borrowing capacity. The amendment would only confirm assurances that were provided in the other House by Lord Livermore. In his work with Baroness Kramer, we were assured that there would be a cap on borrowing to 20% of the loan-to-value ratio in the updated framework agreement. Amendments 4 and 7 reflect those promises, and I urge the Government to support amendment 7 to safeguard the financial integrity of the Crown Estate and ensure that borrowing powers are used wisely and with proper oversight.

[The Exchequer Secretary to the Treasury (James Murray)]

It is a pleasure to serve on the Committee with you as Chair, Ms Furniss. I will turn to the amendments in a moment, but I will first briefly address why clause 1 should stand part, and what it would achieve in amending the Crown Estate Act 1961.

The clause amends the 1961 Act to clarify the powers of the commissioners and remove certain statutory restrictions in respect of borrowing. Those changes are central to the aims of the Bill, which are to modernise the Crown Estate and to remove limitations on investments, to ensure that it can meet its core statutory duties. Those duties—which it is right for the Crown Estate to pursue in the national interest—are to maintain and enhance the value of the estate and the returns obtained from it.

The Crown Estate is a commercial business, independent from Government, that operates for profit and competes for investment. However, limitations placed on it by the Crown Estate Act 1961 currently risk its ability to compete and invest most effectively, meaning that it is less able to deliver returns for the public purse than it might otherwise be. The clause therefore makes two main changes.

First, the clause clarifies the investment powers of the Crown Estate commissioners by expressly conferring powers that are currently implicit in the 1961 Act. That ensures that the commissioners have the power to do anything that is designed

“to facilitate, or is conducive or incidental to,”

discharging their statutory duties, including their core duties to maintain and enhance the value of the estate. The clause also removes restrictions on the commissioners’ powers to invest.

Through those broader investment powers, the Crown Estate will have greater flexibility to invest in new growth opportunities—for example, in digital technologies, to support the acceleration of offshore energy through digital mapping of the seabed. These broader powers will also unlock the Crown Estate’s ability to under de-risking activities, such as surveys and grid co-ordination, which will increase the frequency of offshore wind leasing and support the clean energy mission.

Secondly, clause 1 inserts a proposed new section into the 1961 Act that would grant the Crown Estate the power to borrow out of the national loans fund via the Treasury, or otherwise subject to Treasury consent. It also authorises the Treasury to provide financial assistance to the commissioners. That change will unlock the Crown Estate’s ability to compete more effectively, by enabling it to borrow as its competitors currently can.

The clause has been carefully drafted to include the requirement for Treasury consent prior to the Crown Estate accessing debt. That strong safeguard will ensure that borrowing is carefully considered and controlled. Furthermore, as borrowing will be from Government at commercial rates, the interest paid by the Crown Estate will outweigh the cost to Government of the borrowing.

Any borrowing undertaken by the Crown Estate will be for investment in activities that will drive increases in its revenues, thereby also increasing the profits it generates and provides to the Government, which will help to provide funding for our public services. That will be a net benefit to the public finances, and builds on the Crown Estate’s long track record of delivering significant returns to the public purse year after year. As the shadow Minister mentioned, that has totalled more than £4 billion in the last decade.

I will now turn to amendments 4 and 7, which were tabled by the hon. Members for North West Norfolk and for South Cambridgeshire respectively. The amendments would place a legislative limit on borrowing, through regulations, but it is the Government’s view that limits on borrowing are best set outside of legislation. For that reason, a limit will be set in the memorandum of understanding between the Treasury and the Crown Estate, with the cap set at no more than a 25% net debt-to-asset value ratio. That document has been made available in draft to aid the House in its scrutiny.

The primary safeguard built into the Bill is the requirement for Treasury consent. We are also retaining the requirement for the Crown Estate to maintain and enhance the value of the estate, while having

“due regard to the requirements of good management”,

as set out in the 1961 Act. Taken together, those elements provide clear guardrails and strengthen the important fiduciary duty of the commissioners not to take decisions that could endanger the estate or compromise its core duties.

To underscore the point—given that the two Opposition Members raised questions about this—the Bill is clear that any borrowing undertaken by the Crown Estate can only be from the Treasury or otherwise with Treasury consent. The Treasury will, of course, ensure that any borrowing is consistent with our wider fiscal rules. Therefore, in addition to the requirement to secure Treasury consent, the draft memorandum of understanding between the Treasury and the Crown Estate sets out additional guardrails. For instance, it says that the borrowing should “target a sustainable range”, and is “not to exceed 25%” of the

“Loan to value ratio (defined as the ratio of net debt to asset value”

As with any public sector borrowing, the Treasury will ensure that this is consistent with managing public money principles, to ensure value for money from the taxpayer. On that basis, I hope hon. Members will not press their amendments.

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[Llinos Medi (Ynys Môn) (PC)]

It is a pleasure to serve under your chairship. Ms Furniss. I rise to speak to amendment 6, tabled in my name. The amendment would amend clause 3, which relates to the regard of sustainable development that the Crown Estate commissioners must have when undertaking their activities. It would require the commissioners to set sustainable development objectives for their activities and require them to have regard for UK-wide legislation, such as the Climate Change Act 2008 and the Environment Act 2021. I note that is also the intention of amendment 8.

In addition, amendment 6 would require regard for devolved legislation in England, Wales and Northern Ireland. For Wales, that would include the Well-being of Future Generations (Wales) Act 2015 and the Environment (Wales) Act 2016. Shockingly, child poverty in Wales is set to reach its highest rate in 30 years by the end of this decade, with more than 34% of children living in low-income families. That is 5% up on the current rate, and means that around 32,000 more children in Wales could be pushed into poverty.

The activities of the Welsh Crown Estate could be geared towards helping to address rising child poverty by having regard to the seven wellbeing goals of the Well-being of Future Generations (Wales) Act, such as to develop a more equal, prosperous and resilient Wales. More broadly, this amendment draws inspiration from measures within the Scottish Crown Estate Act 2019, which legislates to ensure that management of the Scottish Crown Estate’s assets is done so that it is likely to contribute to economic development, regeneration and social and environmental wellbeing.

The Crown Estate manages a huge amount of land and natural assets. It is only right that it works with existing devolved legislation across all nations to meet sustainable and wellbeing goals, and to do so by fulfilling clear objectives. I urge the Government to incorporate this aim into the Bill.

[Pippa Heylings]

I will speak to amendment 8, which is similar to amendment 6. It would strengthen clause 3 by ensuring that sustainable development is properly defined within the Crown Estate’s framework document and that this definition explicitly includes a climate and nature duty.

The Crown Estate plays a pivotal role in the management of our land, seas and natural resources. It is well known for its ambition around nature recovery. It is a key player in our offshore wind expansion, biodiversity conservation and sustainable land management, but in areas in which there are multiple competing uses and values, including fishing, marine protected areas, and even highly protected marine areas. Therefore we need reassurances, as were obtained in the other House, that clause 3 does not just require commissioners to keep under review their impact on sustainable development without clearly defining what that means in practice.

I must acknowledge where this amendment started in life, which is with Baroness Hayman’s work in the other House. After much debate, it was agreed that sustainable development must be kept under review by the commissioners, but with a reference to the framework document in which a definition would be provided. Baroness Hayman said:

“What matters is the impact we have and how much we have shifted the dial in terms of what the Crown Estate achieves in support of the Government’s climate and nature objectives.” —[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1448.]

This amendment seeks to provide clarity and accountability for what was agreed verbally in the other House—that the definition would not be on the face of the Bill, but would be in the updated framework agreement. We need that to ensure there is a consistent benchmark against which decisions can be assessed, in line with the public duty to our climate and nature targets. As the definition within the framework agreement would specifically refer to, those are the climate targets under the Climate Change Act 2008 and the nature restoration goals under the Environment Act 2021.

This would mean that the Crown Estate cannot simply pay lip service to sustainability; it must actively contribute to decarbonisation, biodiversity protection and the UK’s broader environmental goals. Climate change and nature loss are economic risks, as well as environmental ones. Embedding clear, enforceable sustainability duties in the Crown Estate’s framework, according to our existing legislation, will ensure that its investments and operations support long-term resilience and prosperity. This amendment strengthens the existing clause. It does not seek to define it on the face of the Bill, but assures us, as happened in the other House, that the definition is within the framework agreement.

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

I will also speak to amendment 1. I add my voice to the request for assurances from the Minister on the alignment of sustainable development with the UK’s net zero goals, and also on community benefits. I agree with him that we must not lay too narrow a scope on the Crown Estate and seek to limit its opportunity as a key revenue driver for the UK economy. Goodness knows, we need it after 14 years of Conservative failure.

I am really concerned, however, about the potential bypassing of deprived coastal communities in the revenue from the Crown Estate to the Treasury. It would be nice to get reassurance from the Treasury of the Government’s plans to ensure that coastal communities closest to many of these huge revenue opportunities will see some of the benefits of that growth.

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[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.

[Pippa Heylings]

To seek clarification, is the Minister saying that, unlike what seemed to be the agreement reached in the other House, we will not seek, through this legislation or any burden put on the Crown Estate, to ensure that it has a climate and nature duty, such as other bodies have? That will not form part of the definition of sustainable development he said will be published on Royal Assent.

[James Murray]

As I mentioned, the definition of “sustainable development” will be published on Royal Assent. Perhaps we can return to any questions that the hon. Member may have on that definition at that point.

The fundamental point that I am seeking to make is about ensuring that the Crown Estate can operate effectively. By having clear and focused priorities, it will operate more effectively than having too many objectives, which end up meaning overall that it will perform less well in the public interest. As I have noted, the Crown Estate is a commercial business. It is independent of Government and operates for profit. Although it has goals that, under its own strategy, can align with national policy objectives, fundamentally, the 1961 Act grants the Crown Estate independence and autonomy.

The Government have accepted the amendment to require the commissioners to keep under review the impact of their activities on the achievement of sustainable development. However, expanding the Crown Estate’s core purposes in legislation, in particular with additional duties or objectives that may unnecessarily complicate or conflict with the achievement of the core commercial objective, would risk undermining that core objective being achieved.

Any actions that undermine the core commercial objective risk undermining the very funding that is used to support environmental and other policy objectives. The Government believe that the Crown Estate should continue to operate in this way—as a commercial business, independent of Government—because it has shown itself to be a trusted and successful organisation, with a proven track record and effective management.

As I noted, the Crown Estate is already a trailblazer in its efforts to tackle climate change and support the environment, and it is required to pay its profits into the UK Consolidated Fund each year. Furthermore, I confirm that the requirement under amendment 8 for any framework document between the Treasury and the Crown Estate to define sustainable development has already been agreed by the Government.

As confirmed on 5 November on Report in the other place, the public framework document that exists between the Treasury and the Crown Estate will be updated in the light of that amendment to clarify that “sustainable development” means regard for the impact of the Crown Estate’s activities on the environment, society and the economy. It will also make it clear that that regard includes, where relevant, consideration of relevant legislation, such as part 1 of the Climate Change Act 2008, which deals with the targets set for 2050, and section 56 of the Climate Change Act and sections 1 to 3 of the Environment Act 2021, which also deal with specific environmental targets. The framework document will also make it explicit that the Crown Estate will include in its annual report a report of its activities in relation to sustainable development. For those reasons, I trust that hon. Members will be able to withdraw their amendments.

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[Pippa Heylings]

We have received assurances that we will have the chance to discuss the sustainable development definition at the time of Royal Assent and that the framework document will pay due regard to climate and nature duties in relation to our targets for 2050 under the Climate Change Act and to our nature restoration duties under the Environment Act; that is good. I urge the Minister to consider that it is an economic choice to consider climate and nature up front, not only that we then raise the money to provide for environmental funding post operation. That is something that we should all embrace, in particular in the Treasury.

[Melanie Onn]

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[The Chair]

Before we come to amendment 9, I impress on the Committee that this is grouped for debate only with new clause 10. Clause stand part will be debated next.

[Pippa Heylings]

I beg to move amendment 9, in clause 3, page 2, line 17, at end insert—

“(3B) In pursuit of the objective under subsection 3A, the Commissioners must assess the adequacy of protections against coastal erosion in areas affected by their offshore activities.”

[The Chair]

With this it will be convenient to discuss new clause 10—Marine Spatial Planning: coordination—

“In relation to any decisions made about marine spatial priorities, the Crown Estate must—

(a) ensure that the decisions are coordinated with the priorities of the Marine Maritime Organisation, and

(b) consult any communities or industries impacted by the plans, including fishing communities.”

This new clause ensures the Crown Estate collaborates with DEFRA’s Marine Spatial Prioritisation through the MMO.

[Pippa Heylings]

Given our conversations in this debate about the importance of considering our coastal communities in relation to the new powers that are to be given to the Crown Estate, I draw attention in particular to an example on the north Norfolk coast, the fastest-eroding coastline in north-west Europe.

Key sites, vital to our energy infrastructure and security, lie on that coast. For decades, Bacton gas terminal has been a cornerstone of the UK’s gas network, ensuring the smooth distribution of supplies arriving from overseas. Just along the coast, in Happisburgh, we find the landfall sites for the Norfolk Boreas and Norfolk Vanguard wind farms, which will generate 1.4 GW and 1.8 GW of power respectively—critical contributions to our renewable energy future.

To protect Bacton’s vital infrastructure, a £20 million sandscaping project moved 2 million tonnes of sand, shielding not just the terminal, but the villages of Bacton and Walcott. In Happisburgh, however, despite its pivotal role in our transition to clean energy, no such protections have been put in place. Already, 40 homes have been lost to coastal erosion, and the latest national coastal erosion risk-mapping data shows that even more of the village is at risk in the years ahead. The amendment would ensure that, as we harness the power of North sea wind, we also safeguard the fragile North sea coast, protecting the communities that host that vital infrastructure.

I will also speak to new clause 10. We have heard about the importance of considering coastal communities within all the decision making, and this new clause on marine spatial planning co-ordination would ensure that the Crown Estate’s decisions on marine priorities were properly co-ordinated and aligned with the Marine Management Organisation, which has the mandate for mediating use priorities on our seabed and along our coast. Affected communities, in particular our fishing communities, would therefore be properly and fully consulted through the Marine Management Organisation.

Similar to the land use framework, this would be a sea use framework for the marine spatial plan that the Marine Management Organisation is mandated to under-take. We need a joined-up approach to decision making, with marine plans balancing economic, environmental and social interests. The Crown Estate must therefore work in full co-ordination with the marine spatial prioritis-ation framework of the Department for Environment, Food and Rural Affairs.

[Jayne Kirkham]

The Crown Estate has started to consult, and is publishing plans before it takes decisions about where to put floating offshore wind stations, for example. Can the Minister assure us that that will be the case in the future, and that when the Crown Estate is planning to build out in the ocean, there will be consultation with fishermen and environmentalists? I think that is the intention, as discussed on Second Reading.

[Pippa Heylings]

I thank the hon. Lady for that point, which we discussed in the Chamber. The crux of this amendment is that there is a mandate for the Marine Maritime Organisation, which is the body that mediates. The Crown Estate is being given new powers for borrowing and investing, and therefore has a vested interest in the prioritisation of activities that are allocated along the seabed and our coasts. That is good, given its amazing, award-winning geospatial mapping prowess.

We have just heard examples of how it is showing the Government scenarios for the economic income and gain that can be gathered from different uses. However, despite that prowess, the Crown Estate should not be the one to prioritise or make the final decision about which activities take place. Communities and other users must be fully consulted. The MMO is mandated to do that, and DEFRA has the marine spatial prioritisation framework, within which the Crown Estate should contribute and co-ordinate. That is the assurance we seek through this amendment.

[James Wild]

I rise briefly to speak to amendment 9, not least because I represent North West Norfolk, which is next door to North Norfolk where I grew up. It is sometimes quite difficult to get the local names correct, but Happisburgh is actually pronounced “Haysborough”, rather than “Happisberg”. I wanted to get that on the record, because people there feel quite strongly about it—it is a mistake that is inadvertently made quite a lot.

It is important to protect national assets such as those at Bacton from coastal erosion. I would expect the Crown Estate already to be taking account of such requirements, and the Government to be doing likewise through their wider planning and strategic approach to coastal erosion, so I look forward to the Minister’s response on how coastal erosion will be prevented.

[Mr Snowden]

I feel sympathy with the contributions from both the Minister and the hon. Member for South Cambridgeshire. There are some issues at the heart of what the amendment and new clause are trying to achieve, but whether they are within the scope of the responsibility of the Crown Estate is an equally valid point. New clause 9 talks about coastal erosion and, while that is an issue, there is also the issue of coastal damage caused by projects where the seabed in particular is licensed. Again, Morgan and Morecambe off the Fylde coast will lead to years of work trying to rebuild sand dunes that will be cabled and tunnelled through for a new cabling corridor. The dunes will be completely damaged due to activity coming in to connect to the national grid.

Furthermore, the new clause talks about consultation. This is where I really do have some sympathy with the Minister, because that is not the responsibility necessarily and primarily of the Crown Estate. The root cause of the issue is that there are already regulations in place for consultation to happen where licences are being issued. The consultation happens; people consult and then they just ignore local communities and industries. Nothing changes, and perfectly valid objections and alternative routes for cabling corridors coming in from the sea are just ignored—but that is a broader issue rather than specific to this point.

[Pippa Heylings]

I will not press either of these amendments to a Division, but I would like to call attention to the fact that, given the greater borrowing and investment powers, the existing frameworks and regulations under which the Crown Estate has been co-ordinating the Marine Management Organisation need to be considered. I think we can all recognise that the situation has changed hugely. Therefore, I urge the Government to consider how they will ensure that there is greater consultation on decisions around prioritisation of what happens where, that greater weight is given to that, and that more resources and powers are given to the MMO to ensure that that happens. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 11—Sustainable development: community benefits—

“(1) Before making any investment decision, the Commissioners must assess—

(a) plans for community benefits for local communities, and

(b) plans for community benefits for coastal communities of offshore activities.

(2) In section 3(1) of the Crown Estate Act 1961, at end insert—

“(1A) The Commissioners must transfer at least 5 per cent of all net profit generated from the Crown Estate’s activities to local communities impacted by those activities.”” —(Pippa Heylings.)

This new clause would require the Commissioners to ensure their activities benefit local communities, including coastal communities, and that 5% of any profits would be transferred to local communities.

[James Murray]

Clause 3 amends the Crown Estate Act 1961 to require the commissioners to keep under review the impact of their activities on the achievement of sustainable development in the UK. I have referred to various aspects of clause 3 as part of our earlier debate, so I will try to be brief. As hon. Members know, this clause was added as an amendment in the other place, based on productive debates that reflected the important role that the Crown Estate has in stewarding our natural environment. As I noted earlier, 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 our public services.

At the same time, the Crown Estate can, and does, focus on activities which also 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. That said, it is right that the public and private sectors make every contribution they can to achieving our climate change targets, and the Crown Estate should continue to be a national trailblazer in that regard. The Crown Estate has committed to becoming a net zero carbon business by 2030, aligning with the 1.5° target, and will prioritise activities that help to 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 the Government to meet the national renewable energy targets.

Regarding 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 that goal later this year, which will include commitments to restore habitats in line with targets in the Environment Act. The Crown Estate also published its approach on nature recovery last autumn, where it committed to delivering increased biodiversity, to protecting and restoring freshwater, marine and coastal systems and to increasing social-wellbeing benefits from nature. However, the reforms introduced by 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. As I have already noted, the Crown Estate operates under a duty in the 1961 Act to have due regard to the requirements of good management. Alongside its core commercial objective, the duty obliges the Crown Estate to maintain and enhance the value of the estate responsibly. It is the Government’s view that these existing statutory requirements and this clause are the best approach.

New clause 11, tabled by the hon. Member for South Cambridgeshire, would require the commissioners to assess plans for benefits to local communities and, in the case of offshore activities, coastal communities before making any investment decisions. It would also require the commissioners to transfer at least 5% of the Crown Estate’s net profit to the local communities impacted by its activities.

At present, local communities benefit from onshore and offshore developments through the economic advantages that such developments bring, including job creation and increased business for local suppliers, and individual developers also contribute to local initiatives. The Crown Estate has also specifically designed the leasing process for its offshore wind leasing round 5 opportunity in the Celtic sea such that developers must make commitments to deliver social and environmental value as part of the development of their new wind farms. Those commitments will be monitored, reported on and enforced throughout the lifetime of the relevant round 5 developments.

The Crown Estate is committed to proactively working with the local communities and partners to enable employment and skills opportunities. For example, it has allocated £50 million through the supply chain accelerator to stimulate green jobs and is developing a green skills pipeline, from a GCSE in engineering skills for offshore wind, seed-funded by the Crown Estate and developed with Cornwall college, to a post-16 “Destination Renewables” course with Pembrokeshire college. The Crown Estate is also partnering with the employment charity Workwhile to create green construction apprenticeships.

The Crown Estate already works closely with communities, charities, businesses and the Government to ensure that its skills initiatives are sensitive to market demands and emerging technologies and to keep them relevant and effective. The Government consider it important that the Crown Estate retains that flexibility in how its skills initiatives are funded and delivered, to ensure that it can contribute to skill training in the best possible way and, importantly, without conflicting with its statutory duty to maintain and enhance the value of the estate.

On that basis, I hope that the hon. Member for South Cambridgeshire feels able to withdraw her new clause. It is the view of the Government that the existing statutory requirements and this clause are the best approach going forward. I commend clause 3 to the Committee.

[Pippa Heylings]

The Minister might have pre-empted my speaking to the new clause. The new clause would ensure that local and coastal communities see real benefits from Crown Estate activities by requiring a proper assessment of community benefits before investment decisions are made and by mandating that at least 5% of net profits be transferred to impacted communities.

For too long, communities, particularly coastal communities, have borne the impact of large-scale offshore developments without seeing a fair share of the financial benefits; we heard that earlier today. The Crown Estate generates billions in revenue from offshore wind farms, marine industries and land developments, yet too often local people see little direct return. The new clause seeks to redress that imbalance and would ensure that those communities benefit from our journey towards net zero, taking people with us.

First, the new clause would ensure transparency and accountability by requiring that the Crown Estate formally assess community benefits before making investment decisions. That would mean that local communities would no longer be an afterthought. They must be considered from the outset in decisions affecting their livelihoods, identity, infrastructure and environment.

Secondly, the new clause would establish a concrete financial commitment by mandating that at least 5% of the profits generated by the Crown Estate’s activities must be reinvested in local communities impacted. That is a fair and proportionate measure, recognising that those communities are often on the frontline of change, whether it be from offshore energy projects, tourism pressures or rural land use shifts. The kickbacks could be revolutionary for towns and villages across the UK and would be a real testament to how clean energy can level up communities.

The new clause is about not just fairness, but economic regeneration. It would provide a direct funding stream to support local jobs, infrastructure, training and environmental projects, and ensure that prosperity generated from our shared natural resources is not centralised in Whitehall or in corporate boardrooms, but flows directly back to the people and places most affected.

If the Government are serious about levelling up and supporting coastal and rural communities and economies, they should have no issue backing the new clause. It is practical, and it would enable us to manage the different developments. It does not seek to block development; it would ensure that development happens fairly and sustainably, with proper co-ordination.

[James Wild]

I will briefly speak to new clause 11. On Second Reading, we heard a lot of debate and discussion about the role of community benefits. As I mentioned, I represent a coastal area where there are existing community benefit schemes through the operators of the offshore wind projects that operate on the East Anglian coast.

The Energy Secretary, who seems to be on a one- man mission to put solar farms on farmland and to put pylons across the countryside with no regard to the impact on communities or nature, has said that the Government will bring forward their own approach to community benefits. I am a strong supporter of community benefits, and I look forward to the Energy Secretary coming forward with that plan. It seems to be the best approach and context in which to address the important points raised by the hon. Member for South Cambridgeshire.

Crown Estate Bill [ Lords ] (Second sitting)

Pippa Heylings Excerpts

Committee stage
Thursday 6th February 2025 Public Bill Committees

[Llinos Medi]

That is why we have asked for a two-year approach, so that we can work together. It has happened in Scotland and it is possible. I think it is only fair that we ask the new UK Government, who want to devolve local authorities and regions in England, for devolution of the Crown Estate in Wales as well. It was another Labour Secretary of State, Ron Davies, who said:

“Devolution is a process. It is not an event and neither is it a journey with a fixed end point. The devolution process is enabling us to make our own decisions and set our own priorities, that is the important point.”

I urge this Labour Government to heed those words and support my amendment to devolve the Crown Estate to Wales.

[Pippa Heylings (South Cambridgeshire) (LD)]

I will speak to new clause 5 and to new clause 12 which calls for the devolution of the Crown Estate to Wales. While Scotland has controlled its Crown Estate since 2017, Wales has been left without these powers, despite the fact that vast Crown Estate assets lie within its borders. It is time to correct that unbalance and bring Wales into line with Scotland. Devolving control of the Crown Estate would not only recognise Wales’s status as an equal nation, but deliver substantial economic benefits to communities across Wales. Under the current system, profits from the Crown Estate flow directly to the UK Government.

[Jayne Kirkham (Truro and Falmouth) (Lab/Co-op)]

As my hon. Friend the Member for St Austell and Newquay partially explained, there is an issue relating to, for example, the Celtic sea, where the Crown Estate has great interest in floating offshore wind. That lies between Wales, Cornwall and the south-west, so where would the line be drawn? It would open up a huge number of complexities that would be very difficult to solve.

[Pippa Heylings]

Nobody is saying that this is easy, but it is possible, and it has happened with Scotland. As many Members have said to us, given that we have territorial devolution and powers over the land, why not the seabed as well? There are ways of managing this, so complexity should not get in the way of ensuring that we have fairness in the distribution of economic benefits.

This funding is desperately needed, particularly given the historical underfunding of Wales on issues such as infrastructure. The success of devolution in Scotland speaks for itself; since 2017, when Scotland gained control of the Crown Estate, it has generated more than £103 million for public finances, so let us think what could happen for Wales if it was able to retain the profits generated by the Crown Estate within their borders.

Wales is expected to generate at least £1 billion from offshore wind energy leases in the coming years alone. Keeping some of that money within Wales could add £50 million a year to the Welsh Government’s budget—funds that could be directly reinvested in public services and local communities.

But this is not just about the financial gain; as the hon. Member for Ynys Môn said, devolving the Crown Estate would open up opportunities for greater investment in renewable energy projects. That is particularly important for coastal communities, which have long suffered from the decline of traditional industries. When they see direct benefits from renewable projects, they are far more likely to support them. That would create jobs, opportunities and sustainable development, delivering long-term economic stability, especially for the coastal regions of Wales that need it most.

The devolution of the Crown Estate has widespread support across Wales, from the Liberal Democrats in this place and the Welsh Parliament to Plaid Cymru, a majority of local authorities in Wales and even to the Welsh Labour Government. There is clear and overwhelming backing. In addition, opinion polls consistently show that the majority of the Welsh public are in favour of seeing the Crown Estate devolved, and it is clear that the people of Wales want to see this change. We want to work together, and I urge the Government to support this new clause and allow Wales to benefit from the powers and financial resources that it so rightly deserves.

[James Wild]

I will not detain the Committee for long. The hon. Member for Ynys Môn referred to the previous Conservative Government’s position, which has not changed today. The proposal would introduce an element of risk in spinning out assets and revenue streams. We heard about the particulars of the Celtic sea, so this is not the right proposal for this time.

Crown Estate Bill [Lords]

Pippa Heylings Excerpts

2nd reading
Tuesday 7th January 2025 Commons Chamber

[Pippa Heylings (South Cambridgeshire) (LD)]

I begin by extending my gratitude to all those who have worked tirelessly in the Lords on the Bill over the past seven months. I note in particular the way in which full transparency was offered and delivered by Lord Livermore, the Financial Secretary to the Treasury, in response to requests for clarification and evidence. I hope that we can replicate such co-operation as the Bill passes through this House.

The objectives of the Bill are to broaden the investment and borrowing powers of the Crown Estate and to strengthen its corporate governance, in order to help accelerate, among other things, the delivery of new renewable energy, particularly offshore wind. We are generally supportive of the Bill and would welcome further scrutiny on issues such as the cap on borrowing; accountability in the relationship with Great British Energy; managing the conflicts between competing interests and values of our seabed and coastline, as mentioned by my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael); community benefit; devolution in Wales; and our climate and nature duty. I will proceed to elucidate those issues.

In the UK, we are off track in meeting our climate targets, following previous years when the Conservatives have dithered and rowed back on pledges. We need to increase investment in renewable energy in order to strengthen our energy security and to help families keep warm and lower their energy bills, particularly during this cost of living crisis. As a result of Russia’s invasion of Ukraine, families and businesses have been left exposed to skyrocketing bills. For far too long we have been reliant on autocrats such as Putin to meet our energy needs.

The Crown Estate oversees 200,000 acres of land, 12,000 km of coastline and a seabed area larger than the combined land mass of England, Wales and Northern Ireland. As the owner and steward of the seabed, the Crown Estate leases plots to offshore wind developers and other infrastructure projects, playing a fundamental role in the sustainable development of this national asset and in the potential for securing our world-leading position on floating offshore wind development.

For many years, however, the Crown Estate has been constrained in its ability to borrow through the Treasury, forcing it—as we understand it—to resort to selling off assets in order to fund its investments for the future. The changes proposed in the Bill, in partnership with Great British Energy, hold the potential to unlock investment in vital infrastructure across supply chains, ports and green energy sectors, and to accelerate progress by unblocking the huge delays in the delivery of new green energy, which is desperately needed following the slow progress made under the previous Government.

It is reassuring to hear that during the Bill’s passage through the Lords, assurances were given that there would be a borrowing cap of 20% of the loan-to-value ratio. We look forward to seeing that reflected in the updated framework agreement as we go into Committee. On the day the Bill was introduced to the House of Lords, the Government announced the Crown Estate’s partnership with Great British Energy to bring forward new offshore wind developments. Despite the significance of that relationship between the two, the original Bill did not provide clarification on or accountability in how it would work.

Clause 4, which was introduced by my Liberal Democrat colleagues, ensures important transparency through annual reports on activities within that relationship. However, we also share Energy UK’s concerns about how that relationship will work, particularly in relation to other private sector investment. We support its calls for annual schedules for offshore wind leasing that identify locations and target capacities. Such a road map would help developers and suppliers to plan investments, including necessary port upgrades, and would align with the offshore wind industrial growth plan.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

Does my hon. Friend agree that this legislation should have set out a framework for devolving the Crown Estate in Wales, as is the case in Scotland?

[Pippa Heylings]

Indeed, I read the report of the debate in the Lords, and there was a passionate request for the Crown Estate in Wales to be devolved to the Welsh Administration and for the benefits to be felt by Welsh communities. We look forward to discussing that in Committee.

Another crucial area that has been mentioned is the mapping of the seabed around our coastline. The Crown Estate has already begun that work with award-winning geospatial techniques. That key contribution to spatial planning for our coastal and marine areas needs to balance economic development with environmental responsibility. For years, the Liberal Democrats have called for comprehensive land and sea use frameworks. Although the Government have committed to a land use framework, we remain far behind on marine spatial planning. We have heard today, in response to the concerns of my right hon. Friend the Member for Orkney and Shetland, about the conflict of interest in the Crown Estate leading on determining priorities in our coastal and marine areas. It is on that point that we seek assurances.

Statutory bodies such as the Maritime Management Organisation are responsible for prioritising and managing competing interests and values between users of our coastline, including in fishing, as has been mentioned, and in tourism, amenity use and shipping. All those things need to be managed, and that can be done through marine spatial management. We caution against the Crown Estate becoming the leader by default because it is the owner and steward of the seabed and has the capacity for mapping. We know that it is undertaking liaison work with fisheries, and that is good, but the MMO is the statutory body for managing those competing interests, and we seek assurances that that will be clarified in Committee.

Raising the issue of devolution to Wales brings me to the key point of community benefits. We need to know how communities will benefit from the investment in infrastructure and renewable projects facilitated by this Bill. Local communities must not feel that this energy transformation is being done to them, but that it is empowering them to participate and benefit from it. While the new borrowing powers will enable investment in offshore wind, they will also facilitate property development across the 185,000 acres of the Crown Estate, so the Bill must do more to ensure that those developments do not ride roughshod over community concerns regarding planning, infrastructure and environmental standards, both on land and at sea. People must have a say in the decisions that affect them and, where infrastructure is concerned, they should also receive the benefits where appropriate.

I was really pleased to see the inclusion of amendment 10, championed by Baroness Hayman. That amendment requires the commissioners to

“review the impact of their activities”

on sustainable development. As Liberal Democrats, we have long called for climate and nature duties to be a requirement of all public bodies. As Baroness Hayman wisely said,

“What matters is the endgame and the results… What matters is the impact we have and how much we have shifted the dial in terms of what the Crown Estate achieves in support of the Government’s climate and nature objectives.”—[Official Report, House of Lords, 5 November 2024; Vol. 840, c. 1425.]

During the debate in the Lords, an undertaking was given that the framework agreement would be updated to include a definition of the meaning of sustainable development as regards the Crown Estate, with explicit reference to part 1 of the Climate Change Act 2008—the targets for 2050—as well as section 56 of that Act, and to sections 1 to 3 of the Environment Act 2021 regarding nature recovery. I look forward to seeing an updated version of the framework agreement to reassure us that this definition of sustainable development has been included.

This Bill presents a trident of opportunity. It can enhance energy security, reduce household bills and bring us closer to achieving our net zero targets, but we cannot afford to lose sight of the need for financial accountability, the duty to protect nature, the need to devolve to Wales, and the need to ensure that all communities are included in the crucial journey to net zero.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Pippa Heylings Excerpts

Committee of the whole House & 3rd reading
Tuesday 17th December 2024 Commons Chamber

[Pippa Heylings (South Cambridgeshire) (LD)]

I beg to move amendment 1, page 1, line 2, at beginning insert—

“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, before paragraph (a) insert—

“(za) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”

(A2) After section 9(1A) of that Act insert—

“(1B) A “specified employer” means—

(a) a person providing a care home service or a domiciliary support service who is regulated under—

(i) Part 1 of the Health and Social Care Act 2008,

(ii) Part 1 of the Regulation and Inspection of Social Care (Wales) Act 2016, or

(iii) Part 5 of the Public Services Reform (Scotland) Act 2010,

(b) a person contracted to provide primary care under the provisions of—

(i) Part 4 of the National Health Service Act 2006,

(ii) Part 4 of the National Health Service (Wales) Act 2006, or

(iii) sections 17J to 17O of the National Health Service (Scotland) Act 1978,

(c) a person contracted to provide general dental services under the provisions of Part 2 of the National Health Service (General Dental Services) Regulations 1992,

(d) a person contracted to provide pharmacy services under the provisions of—

(i) Part 7 of the National Health Service Act 2006, or

(ii) Part 8 of the NHS (Pharmaceutical and Local Pharmaceutical Services) Regulations 2013, or

(e) a charitable provider of health and care, or

(f) a person providing hospice care whether in a hospice or elsewhere.

(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””

This amendment, together with Amendment 2 provides that care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care would continue to pay contributions at current rates.

[The Second Deputy Chairman]

With this it will be convenient to discuss the following:

Amendment 4, page 1, line 2, at beginning insert—

“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.

(A2) In section 9(1A) after paragraph (aa) insert—

“(ab) if section 9AA below applies to the earnings, the reduced secondary percentage;”

(A3) After section 9A insert—

“9AA Qualification for reduced secondary percentage

(1) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this section applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed—

(a) by a charity registered in the charity register or the Scottish charity register,

(b) by a voluntary organisation within the meaning of regulation 2 of the Housing Benefit Regulations 2006,

(c) to work in a GP practice,

(d) by a university, or

(e) by a college of further education.

(2) For the purposes of section 9(1A)(ab) above, the reduced secondary percentage is 13.8%.””

Amendment 7, page 1, line 2, at beginning insert—

“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.

(A2) In section 9(1A) before paragraph (a) insert—

“(za) if subsection (1B) below applies, the healthcare and small charities secondary percentage;”

(A3) After section 9(1A) insert—

“(1B) This section applies where the earner is employed to work—

(a) in any of the following settings—

(i) a GP surgery,

(ii) an optometry or dispensing optician practice,

(iii) a dental surgery,

(iv) a pharmacy,

(v) a residential care setting, or

(b) for a registered charity employing 50 people or fewer.

(1C) For the purposes of subsection (1A)(za) the healthcare and small charities secondary percentage is 13.8%.””

Amendment 13, page 1, line 2, at beginning insert—

“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.

(A2) In section 9(1A) before paragraph (a) insert—

‘(za) if sub section (1B) below applies to the earnings, the specified sector secondary percentage;’

(A3) After section 9(1A) insert—

‘(1B) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this subsection applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed in any of the following specified sectors—

(a) adult social care,

(b) hospices,

(c) primary care,

(d) nurseries registered in the Early Years Register maintained by the Office of Standards in Education, Children’s Services and Skills, or

(e) a charity registered in the charity register or the Scottish charity register.

(1C) For the purposes of this Act above, the specified sector secondary percentage is 13.8%.’”

This amendment would provide that adult social care, hospice, primary care, nurseries and charities would continue to pay contributions at current rates.

Amendment 19, page 1, line 2, at beginning insert—

“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, before paragraph (a) insert—

“(za) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”

(A2) After section 9(1A) of that Act insert—

“(1B) A “specified employer” means—

(a) a provider of education or childcare to children under five years of age—

(i) registered in England in the early years register maintained by the Office for Standards in Education, Children’s Services and Skills,

(ii) registered in Wales with Care Inspectorate Wales, or

(iii) registered in Scotland with the Scottish Care Inspectorate; or

(b) a university.

(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””

This amendment provides that Early Years Settings and Universities would continue to pay contributions at current rates.

Amendment 20, page 1, line 2, at beginning insert—

“(A1) In section 9(1A) of the Social Security Contributions and Benefits Act 1992, after paragraph (aa) insert—

“(ab) if the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”

(A2) After section 9(1A) of that Act insert—

“(1B) A “specified employer” means—

(a) a registered charity, or

(b) a housing association.

(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.””

This amendment provides that charities and housing associations would continue to pay contributions at current rates.

Amendment 23, page 1, line 2, at beginning insert—

“(A1) The Social Security Contributions and Benefits Act 1992 is amended as follows.

(A2) In section 9(1A) after paragraph (aa) insert—

“(ab) if section 9AA below applies to the earnings, the veterans secondary percentage;”

(A3) After section 9A insert—

“9AA Veterans secondary percentage

(1) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this section applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is a veteran.

(2) For the purposes of section 9(1A)(a) above, the veterans secondary percentage is 13.8%.

(3) For the purposes of this section, a “veteran” means a former member of any of His Majesty’s forces.””

This amendment would exempt veterans' salaries from NICs changes.

Amendment 10, page 1, line 3, at end insert—

“(1A) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.

(1B) In section 9(1A) after paragraph (aa) insert—

“(ab) where the employer is a specified employer under subsection (1B), the specified employer secondary percentage;”

(1C) After section 9(1A) insert—

“(1B) A “specified employer” means—

(a) a person providing a care home service or domiciliary support service regulated under the Health and Personal Social Services (Quality, Improvement and Regulation) (Northern Ireland) Order 2003, or

(b) a person providing primary medical services through contractual arrangements with a Health and Social Services Board,

(c) a person providing general dental services under Part 2 of the General Dental Services (Northern Ireland) Regulations 1993,

(d) a person providing pharmaceutical services under Part 2 of the Pharmaceutical Services Regulations (Northern Ireland) 1997,

(e) a provider of health and care registered as a charity by the Charity Commission for Northern Ireland,

(f) a person providing hospice care whether in a hospice or elsewhere,

(g) a voluntary or community organisation, and

(h) a provider of childcare registered in the Family Support NI Register.

(1C) For the purposes of this Act, the specified employer secondary percentage is 13.8%.”

(1D) After subsection (3) insert—

“(4) The Secretary of State must by regulations define a voluntary or community organisation for the purposes of subsection (1B)(g).””

This amendment aims to provide that in Northern Ireland care homes, domiciliary care providers, GP and dental surgeries, pharmacists, health and care charities, hospice care providers, voluntary or community organisations and childcare providers would remain subject to the current secondary Class 1 contribution rate, not the increased rate proposed in the Bill.

Amendment 16, in clause 1, page 1, line 3, at end insert—

“(1A) The Social Security Contributions and Benefits (Northern Ireland) Act 1992 is amended as follows.

(1B) In section 9(1A) before paragraph (a) insert—

“(za) if sub section (1B) below applies to the earnings, the specified sector secondary percentage;”

(1C) After section 9(1A) insert—

“(1B) Where a secondary Class 1 contribution is payable as mentioned in section 6(1)(b) above, this subsection applies to the earnings paid in the tax week, in respect of the employment in question, where the earner is employed in any of the following specified sectors—

(a) adult social care,

(b) hospices,

(c) primary care,

(d) nurseries registered with Family Support NI, or

(e) a registered charity in Northern Ireland.

(1C) For the purposes of this Act above, the specified sector secondary percentage is 13.8%.””

This amendment would provide that adult social care, hospice, primary care, nurseries and charities in Northern Ireland would continue to pay contributions at current rates.

Clause stand part.

Amendment 2, in clause 2, page 1, line 12, leave out “£96” and insert—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £175, and

(ii) in all other cases, £96.”

This amendment, and Amendment 3, exempts care providers, NHS GP practices, NHS commissioned dentists, NHS commissioned pharmacists, charitable providers of health and care, and those providing hospice care from the changes to the threshold.

Amendment 5, page 1, line 12, leave out “£96” and insert—

“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £175, and

(ii) in all other cases, £96.”

Amendment 8, page 1, line 12, leave out “£96” and insert—

“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £175, and

(ii) in all other cases, £96.”

Amendment 11, page 1, line 12, leave out “£96” and insert—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £175, and

(ii) in all other cases, £96.”

This amendment provides that the employers listed in Amendment 10 would be subject to the existing secondary threshold for secondary Class 1 contributions, not the lower threshold proposed in the Bill.

Amendment 14, page 1, line 12, leave out “£96” and insert—

“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £175, and

(ii) in all other cases, £96.”

This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities from changes to the threshold.

Amendment 17, page 1, line 12, leave out “£96” and insert—

“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £175, and

(ii) in all other cases, £96.”

This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities in Northern Ireland from changes to the threshold.

Amendment 24, page 1, line 12, leave out “£96” and insert—

“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £175, and

(ii) in all other cases, £96.”

See Amendment 23.

Amendment 3, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits Act 1992 or section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and

(ii) in all other cases £5,000.””

This amendment is linked to Amendments 1 and 2.

Amendment 6, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) in respect of an earner listed in section 9AA(1) of the Social Security Contributions and Benefits Act 1992, £9,100, and

(ii) in all other cases £5,000.””

Amendment 9, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) in respect of an earner to whom the healthcare and small charities secondary percentage under section 9(1B) of the Social Security Contributions and Benefits Act 1992 applies, £9,100, and

(ii) in all other cases £5,000.””

Amendment 12, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) for a specified employer under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and

(ii) in all other cases £5,000.””

This amendment makes provision for the monthly and annual thresholds in line with Amendment 11.

Amendment 15, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) in respect of an earner under section 9(1B) of the Social Security Contributions and Benefits Act 1992, £9,100, and

(ii) in all other cases £5,000.””

This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities from changes to the threshold.

Amendment 18, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) in respect of an earner in a specified sector under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £758, and

(ii) in all other cases, £417”, and

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) in respect of an earner under section 9(1B) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992, £9,100, and

(ii) in all other cases £5,000.””

This amendment would exempt adult social care, hospice, primary care providers, nurseries and charities in Northern Ireland from changes to the threshold.

Amendment 25, page 1, line 14, leave out paragraphs (a) and (b) and insert—

“(a) in sub-paragraph (a), for “£758” substitute—

“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £758, and

(ii) in all other cases, £417”, and”

(b) in sub-paragraph (b), for “£9,100” substitute—

“(i) where the earner is a veteran within the meaning of section 9AA(3) of the Social Security Contributions and Benefits Act 1992, £9,100, and

(ii) in all other cases £5,000.””

See Amendment 23.

Clause 2 stand part.

Clauses 3 and 4 stand part.

New clause 1—Review of the impact of the Act—

“The Chancellor of the Exchequer must, within a year of this Act being passed, publish an assessment of the impact of the changes introduced by this Act on—

(a) rates of employment,

(b) real wages,

(c) inflation, and

(d) real household disposable income.”

New clause 2—Review of effect on SMEs, hospitality, tourism and seasonal workers—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a review of the impact of the measures contained in this Act.

(2) The review must consider in particular—

(a) the impact of those measures on the finances and staffing of small and medium sized businesses;

(b) the impact of those measures on the finances and staffing of small and medium sized businesses in the hospitality and tourism sector;

(c) the impact of those measures on sectors who rely on seasonal workers.

(3) In this section, “small and medium sized businesses” means any business which has an average headcount of staff of less than 250 in the tax year 2023-24.”

This new clause would require the Government to produce an impact assessment of the effect of the Act on SMEs, Hospitality, Tourism and Seasonal workers and on the sectors relying on seasonal workers.

New clause 3—Review of effect of employer NIC threshold—

“(1) The Chancellor of the Exchequer must, within six months of the passing of this Act, lay before Parliament a review of the impact of the measures contained in this Act on part-time workers.

(2) The review must consider in particular the effect of the threshold set by section 2 of this Act on part-time workers—

(a) earning £5,000 - £9,000, or

(b) working under 16 hours per week.”

This new clause would require the Government to produce a report into the impact of the employer NIC threshold on part-time staff, especially those who are lower paid or working less than 16 hours a week.

New clause 4—Employment allowance: review of exception on childcare service providers—

“(1) The Chancellor of the Exchequer must conduct a review of how the exception from the employment allowance under section 2 of the National Insurance Contributions Act 2014 (“the 2014 Act”) affects providers of childcare services.

(2) The review must consider the likely impact on providers of childcare services were section 2 of the 2014 Act to be amended to enable such providers to qualify for the allowance.

(3) A report setting out the findings of the review must be published and laid before both Houses of Parliament within six months of this Act being passed.”

[Pippa Heylings]

These hikes in employer national insurance contributions are not just numbers on a spreadsheet, but will have real and damaging consequences and will strike at the heart of small and medium-sized businesses, which are the backbone of our economy. In my constituency in South Cambridgeshire, we have one of the highest densities of small and medium-sized enterprises, principally in the biotech and life sciences sector, which is a growth area for our economy. It is critical that we get this right, and I have heard from the sector that it is troubled by this legislation.

More worryingly, the consequences will extend to our social and healthcare sectors, which are already under immense strain. GP surgeries and care homes across the UK are at risk of being severely impacted. Those are essential frontline services, which are essential to supporting the NHS and to fulfilling this Government’s mission of moving from treatment to prevention, and from hospital to community.

How can we expect to tackle the backlog in routine operations, and how can we deal with the winter waiting lists at accident and emergency, and with so much pain and anguish, if the primary care providers that form the foundation of our healthcare system are being undermined by this tax increase?

[Carla Denyer (Bristol Central) (Green)]

I thank the hon. Member for allowing me to speak briefly. She references primary care. I have heard from five different GP surgeries in my constituency, who have written to me to warn that the national insurance increase will directly undermine patient care, when GP practices are already under severe financial strain due to years of neglect. Does she agree that the Government’s process of addressing national insurance costs via GP contract negotiations is just too slow? It could go on until spring, but practices are making staffing decisions right now.

[Pippa Heylings]

I agree. What the hon. Member says is critical, and I will come on to the situation with our GPs. The Lib Dems continue to highlight the point that to fix the NHS, we have to fix the social care crisis. Freeing up hospital beds requires us to fix the social care sector. According to research, 60% of the UK’s care home beds are provided by private companies, which are on the brink of bankruptcy and are being tipped over the edge thanks to these changes and rises in employers’ national insurance contributions. We do not understand how that can align with the plans of the Chancellor and the Health Secretary to alleviate pressure on hospitals and ensure effective healthcare delivery.

[Dr Luke Evans (Hinckley and Bosworth) (Con)]

The hon. Member has hit the nail on the head. The Labour Government say that they want to deal with this situation, and that they effectively protected secondary care, but the NI applies to GPs at the front end and care homes at the back end. That means that it will be the hospitals who hold the responsibility—the acute places that we need to keep clear if we are to help the backlog move through. Without getting an answer now, we risk recruitment decisions being kept on hold over the next three or four months and cutbacks being made. Does the hon. Member agree that, on top of the difficulties of an already hard winter, that will cripple the NHS?

[Pippa Heylings]

I agree with the hon. Member. I will give one example: the Arthur Rank hospice, which serves all of Cambridgeshire. I had a tour there and saw the work being done by its dedicated professionals. I was informed by its senior leadership that these hikes in national insurance contributions for employers will be the equivalent of £230,000 in additional payroll costs on top of the fundraising that it already has to do. That is money that it does not have. We know from the debate on assisted dying, assisted suicide and the terminally ill how critical palliative care and end-of-life care is. That is one hospice that will struggle severely to deal with these charges.

Hon. Members have spoken about the GP crisis. According to the British Medical Association, 1,387 GP practices have closed since 2015 and the NHS has lost the equivalent of 1,333 full-time, fully qualified GPs. Each GP is responsible for an average of 2,294 patients, and about 3 million people have been directly affected in the last decade by shrinking GP numbers. At a time when we desperately need more GPs, we are introducing a tax that risks driving even more practices out of business. It is not just me saying that; I am sure that hon. Members across the House will have heard from GPs in their constituencies.

In my constituency of South Cambridgeshire, I have heard from the Harston, Comberton, Queen Edith, Eversden and Melbourn practices. I have spoken in particular to Dr Gee of Harston surgery, who has told me that his practice with 7,600 patients faces a £20,000 bill from April just to maintain its current services—just to stand still.

[Dave Doogan (Angus and Perthshire Glens) (SNP)]

The hon. Lady is making a tremendously informed speech and demonstrating a level of understanding of primary care and the care sector that we could only dream of from the Government. Is it her concern that many charities, voluntary sector organisations and GP surgeries are already operating on the thinnest margins of financial sustainability and that this measure will torpedo the very organisations that protect our communities from absolute chaos? Secondary care cannot do it alone; it is upheld by primary care and the care sector. Is she as concerned as many other hon. Members that this will cause absolute chaos?

[Pippa Heylings]

I agree with the hon. Member. I know that the Government are in conversation with GPs, but GPs are writing to us saying that they are seriously concerned.

The GP in Harston said:

“GPs cannot raise prices or operate at a loss.”

They have not had clarification or confirmation from the Government about how funding that is to be given to others in the public sector will be available to them. Just at the critical time when GPs are coming to their annual spending reviews and budgeting, the Government are bringing them this uncertainty. GPs do not feel that they are getting the right messaging or any kind of clarity that will save people’s jobs.

[Robin Swann (South Antrim) (UUP)]

I thank the hon. Member for giving way; she has been generous with her time. Does she realise that this is not just a problem in England, Scotland and Wales? It is a significant problem in Northern Ireland, where we have already seen a high number of GP practices returning their contracts. At this time when the solution was meant to be to move to multidisciplinary teams, the increase in national insurance contributions for GPs as employers is putting additional stress on their contracts, given the amount of money they are receiving from central Government. In Northern Ireland, 75% of our domiciliary care and home care is provided by private suppliers, and this additional cost will be added to them as well.

[Pippa Heylings]

I agree with the hon. Member. In my constituency of South Cambridgeshire, we had the tragic situation of four much-loved, much-respected family doctors handing back their contracts. It happened at East Barnwell surgery, to the distress of those GPs and all their patients. That is because of the contract, and due to failures by the previous Conservative Government to understand in the GP funding formula what deprivation as well as age demographics mean in that contract. On top of that, the hikes in employer national insurance contributions have driven them over the edge.

[Sir Edward Leigh (Gainsborough) (Con)]

We had this great debate on assisted dying where every single person who spoke said it was essential that we improve palliative care. I wonder whether we could form a consensus in this Committee. One compromise that the Government could make is to take hospices out of this tax. That would be so popular, achieve so much and ensure that our elderly and frail people were properly looked after. I give that one compromise to the Government.

[Pippa Heylings]

I thank the right hon. Member. As I mentioned, Arthur Rank hospice in my constituency is one such hospice that should definitely have that compromise. Not only that; we have to look at the whole primary care sector—both GPs and independent care homes—because that is what will winter-proof our NHS. We cannot fix the NHS without fixing social care.

The national insurance increases are not just unwise; they are unthinkable. We are in a time of healthcare crisis when people are already struggling to secure appointments. Despite the Government’s assurances, these tax rises will inevitably affect ordinary people. They will particularly hurt those desperately trying to access their local GP and crucial appointments.

We cannot and will not fix the NHS by driving its primary care providers into the ground. I urge the Government to engage with our GPs, reconsider and provide immediate reassurance to GP practices, hospices and care homes that they will be protected them from these changes. Without those frontline services, the NHS stands no chance of coming off life support.

[Joe Morris (Hexham) (Lab)]

I rise to speak about the need for the Bill and the continued assault by the Conservative party on public trust and the public finances. When I go out in my constituency, I speak to people who are appreciative of the “bin fire”—that is the term that one of my constituents used—facing Treasury colleagues when we assumed office. Money for projects and half-baked plans was used more to launder the Conservative party’s reputation than to improve our public services.

When someone comes into office and finds out that the job is not as had been advertised and that the previous person in post set fire to the office, they have to do things differently. They have to begin to rebuild trust with the people they serve and to have honest conversations with the public. That is what the Government are determined to doing. [Interruption.] Opposition Members can chunter as much as they like, but they know that they gambled with public trust and undermined every aspect of themselves and the institutions of the British state. That is not just a failure on their part but a failure on the part of everyone in their party and everyone who knocked on doors. Ultimately, they were judged harshly by the British public for that.

The Bill is necessary to repair the public finances and rebuild public trust. We did not want to do this. We had to maintain our manifesto promise not to see tax rises for working people, but we must ensure that the country that we hand on is in a significantly better state than the country we inherited. That is the Government’s task.

Oral Answers to Questions

Pippa Heylings Excerpts

Tuesday 3rd December 2024 Commons Chamber

[Rachel Reeves]

One of the current challenges, as the hon. Gentleman will know, is that agricultural property relief is often used for tax avoidance. People are buying farmland not because they are family farmers but because they do not want to pay any inheritance tax. That is why we are reforming the system to bring in much-needed money to fund our public services, and to have a fair system with a 50% discount to inheritance tax paid on agricultural property and a 10-year period to pay that inheritance tax, interest free.

[Pippa Heylings (South Cambridgeshire) (LD)]

Last week, I joined a biotech boot camp in South Cambridgeshire. Although the investors and entrepreneurs recognise and welcome the research and development budget announced in the Budget, they said it is a reduction from 2021. Does the Chancellor recognise that we need to increase investment in R&D to encourage long-term investment in our leading services?

[Rachel Reeves]

We were really pleased to announce an R&D budget of more than £20 billion at the autumn Budget. This is important to funding and accelerating R&D not just in the hon. Lady’s constituency but across the country. Combined with the corporate tax road map, as well as the commitment to continuing funding for Horizon, our universities and great innovators can look to the future with confidence.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Pippa Heylings Excerpts

2nd reading
Tuesday 3rd December 2024 Commons Chamber

[James Murray]

I will make some progress as I want to explain why we are taking this tough decision, and why it is so important that we take this decision now, as set out by the Chancellor in the Budget. Revenue raised by measures in the Bill will play a critical role in enabling the Government to fix the public finances, restore economic stability in a fiscally responsible way, and get the NHS back on its feet.

[Pippa Heylings (South Cambridgeshire) (LD)]

Will the Minister give way?

[James Murray]

I will make some progress.

We know how crucial economic stability is for businesses taking investment decisions, and as I said to my hon. Friend the Member for Bournemouth East (Tom Hayes), we know how crucial it is for businesses to have a healthy NHS. As a result of measures in the Bill, as well as wider measures announced in the Budget, the NHS will receive an extra £22.6 billion increase in resource spending to deliver 40,000 extra elective appointments a week. That is urgently needed to get the NHS back on its feet. The increase in funding will be done within our tough fiscal rules—new rules that will bring an end to borrowing for day-to-day spending, something that the previous Government never achieved or even aimed for.

--- Later in debate ---

[Luke Murphy]

The Bill, and the Budget, protect the smallest businesses, as the Minister has already explained. It is disappointing to hear the hon. Member sharing the Conservative party’s cakeism. Opposition Members must surely support the investments that the Bill will deliver, but if they oppose the Bill, how do they propose to fund them? Turning up at the supermarket with a long shopping list but no means to pay does not work in real life, and it does not work in government either.

The Conservatives have clearly learnt nothing from their kamikaze mini-Budget of 2022. Perhaps they believe that cakeism has just not been tried properly. This Government, by contrast, have taken the tough but fair decisions to protect working people, invest in our NHS and rebuild our public services. For too long the burden of tax has fallen on working people, but under this Government, larger businesses and the richest will pay a little more in tax to help fund the NHS and other public services on which working people rely. Where the Conservatives would either cut public services or pick the pockets of working people, this Government are asking those with the broadest shoulders to pay a bit more to help repair our broken public services—broken over the last 14 years. This Bill will help to deliver on the priorities of my constituents in Basingstoke, who will be able to see a doctor when they need one, and schools will be able to deliver the best—

[Pippa Heylings]

Will the hon. Member reassure the GPs in my constituency, in Harston, Comberton, the Eversdens, Melbourn and Queen Edith’s, who have sought reassurances that the Government do not intend to threaten the viability of thousands of NHS general practices through these charges?

[Luke Murphy]

I am not sure that it is for me to give reassurances—it is probably for Ministers to do that—but what I can do is repeat what the Minister said earlier: the Government will bring forward the settlement for GPs in the usual way.