Crown Estate (Wales) Bill [HL]

Lord Sandhurst Excerpts

Friday 6th June 2025 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

I shall speak to the amendments in my name. By way of background, we have had the benefit of the noble Baroness, Lady Harris of Richmond, speaking about what makes this issue what I would describe ultimately as a hearts-and-minds issue. The acquisition of the Crown Estate in Wales by conquest and inheritance, the imposition of English laws, the exploitation, as it is perceived in Wales, of Wales’s resources of coal and water and the fact that Scotland has been allowed to control its own estate turn this into an important political and hearts-and-minds issue. I have tried, through the amendments I have put forward, to recognise that. In saying that it is an important hearts-and-minds issue, we must bear in mind the view of the Welsh Government, of the same complexion as the Government here in London, that they want devolution. The overwhelming majority of Welsh authorities want devolution. The very strong feeling is, for the reasons that I have tried briefly to summarise, that there ought to be devolution of the Crown Estate to Wales.

What has bedevilled this problem is a failure to understand and give effect to the difference between ownership and benefit from an asset and management of an asset. Those of us who may be fortunate to have the odd spare penny or two know the difference. Allowing someone else who is better qualified to manage assets while ensuring that the policy towards those assets and the ultimate benefit appertain to the owner is an important distinction that I have sought to make.

The first step is to try to identify what is the Crown Estate in Wales. Is it valuable? Does it have any assets? Does it have any revenue? Noble Lords may recall that in the Second Reading debate I spent a little time—I am not going to do that today because it is unnecessary—going through the accounts of the Crown Estate Commissioners in respect of Wales. The revenue and asset values for the year ending March 2021 were clear, but there was nothing in the accounts thereafter.

I challenged the Minister, the noble Lord, Lord Livermore, the Financial Secretary to the Treasury, about how an accountant could possibly not be able to identify the assets and income. I am immensely grateful to him and the chief executive of the Crown Estate Commissioners and to one of the commissioners for a meeting I had with him. Having checked with him, and I am happy to say he agrees that I can say this, I was told by him that in the financial statements for next year—that is, for the year ending March 2026—it is the commissioners’ intention to provide a separate breakdown for Wales of the assets and revenue. That shows that you can identify what is Welsh and what is English, and you can show the resultant revenue streams and capital expenditure, so an awful lot of the obfuscation that has occurred can be got rid of. I do not want to comment any further. Let us wait for those accounts to be produced. It brings to an end the argument that you cannot really say what is Welsh and what is English and what is the benefit from it. We will know. It is a great pity that this was not done before.

Therefore, I think that what is before us now is, if this hearts-and-minds issue is to be addressed and dealt with, how do we take this forward? It would be very helpful for us to hear from the Minister about the discussions that have been taking place between his colleagues—I assume that they are his colleagues—in Cardiff and his colleagues here in London about dealing with this hearts-and-minds issue and, as the noble Lord, Lord Moynihan, has been very careful to stress, obtaining economic benefits for Wales. The distinction that I try to draw is between ownership of and benefit from the assets and the management of the assets, and that is why I put forward Amendments 4 and 7.

First, Amendment 4 is primarily to set a timetable. It is no use having a Bill, it seems to me, that transfers the assets on its passing without some clear preparatory work and a timetable to reassure investors and others that the transfer is orderly. Therefore, Amendments 4 and 7 put forward a timetable. I have put dates forward as indicative only: obviously, the timetable is a matter for detailed discussion between the Governments in London and Cardiff, providing that, during that period, the Crown Estate commissioners remain completely in control—they ought to take account of the views of Welsh Ministers but not be bound by them—and that the income thereof in the meantime is properly identified. This really provides a bridging period, dealing with the issue of the transfer of the assets but allowing their management to continue, and therefore really tries to address the problem that, as I understand it, some Government Ministers have put forward, that all this would wreak havoc with investment and jobs in Wales. I regard that as a fallacy. When one really looks at what we are talking about, it is accepting that the Crown Estate in Wales is a national asset of the Welsh people, but accepting that there needs to be an orderly transfer.

As to the future, I have put down a separate amendment, Amendment 5, which I will address in due course, in the second group of amendments, because it addresses this fundamental misunderstanding that is used to try to justify the preparation of an injustice which does such damage to the union.

[Lord Sandhurst (Con)]

My Lords, the amendments in this group relate to the operation of the Crown Estate in Wales under the newly devolved approach. I should say at the outset that on this side of the House, we are opposed to the Bill in principle. I know that the noble Lord, Lord Wigley, tabled amendments to the Crown Estate Act during its passage through your Lordships’ House. The Official Opposition were clear at that point that the Government should resist those amendments. As my noble friend Lady Vere of Norbiton said then, we have set the Crown Estate on a very different path as a result of that legislation, and now is not the time to frustrate that process with a very different proposal on the direction of the Welsh part of the Crown Estate. That argument was right then; it is right now.

Amendments 1 and 6 in the name of my noble friend Lord Harlech would require the revenues of the Welsh part of the Crown Estate to be paid to the Exchequer after the devolution and transfer of functions to a new body. This would ensure that the existing revenues go to the Exchequer, which, as we all know from the rumours about the spending review next week, is already in great need of income. If control of the functions of the Welsh Crown Estate were to be devolved but the revenues continued to be paid to the Exchequer, that would at least achieve part of the aim of the noble Lord, Lord Wigley, without depriving the Exchequer of much-needed revenue. Perhaps the noble Lord is open to that.

My noble friend Lord Harper raised interesting and cautionary points about the Barnett formula more generally. Amendments 2 and 8 in the name of my noble friend Lord Moynihan seek to ensure that the Welsh Crown Estate is bound by the same borrowing limits as the Crown Estate itself. As noble Lords will recall from the passage of the previous Bill, my noble friends Lady Vere of Norbiton and Lord Howard of Rising spoke at length and pressed Ministers to secure that borrowing limit. We were pleased that Ministers accepted those calls and implemented a borrowing limit, even though this was placed on a statutory footing. The amendment which my noble friend Lord Moynihan has sensibly tabled seeks to ensure that the Welsh Crown Estate is similarly bound by an appropriate limit on its borrowing. Here I should mention, of course, the important points that he made about the impact that this transfer would have on the future of energy, in this country as a whole and in Wales in particular, and the difficulties in apportioning that.

Amendment 3, in the name of my noble friend Lord Moynihan, seeks to establish a backstop to prevent mismanagement of the Welsh Crown Estate. We know how poorly Wales is served by her current devolved Government. Whether it is education, healthcare or economic outcomes, Wales consistently underperforms, so much of this is the responsibility of the Welsh Government. Given that backdrop, it is understandable that noble Lords are a little more than reticent about proposals to take another step down that road, with a body as important as the Crown Estate and with such big assets. We on these Benches share the concern that motivates my noble friend in his amendment, and we would be interested to hear from the Minister whether the Government might consider some form of backstop such as that proposed by this amendment.

Amendments 4 and 7, in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd, reflect legitimate concerns about the untimely transfer of these powers in the event that the Bill is passed. Clearly, a sudden change so soon after we passed the Crown Estate Act, which sets a very different direction of travel for the Crown Estate, would be very disruptive to that new direction. Perhaps the noble Lord, Lord Wigley, would respond to that point in his remarks at the conclusion of this group.

In summary, we have serious concerns about the transfer of the Welsh parts of the Crown Estate to a devolved framework. There are many important issues that must be addressed before this proposal could go forward. We look forward to hearing from the noble Lord, Lord Wigley.

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords, before I start my speech, I pay tribute to our Armed Forces who participated in D-Day 81 years ago today. I will mention the 2nd Battalion of the South Wales Borderers and the Durham Light Infantry, who fought side by side on the beaches that day. We will never forget their sacrifices.

While the Government’s position was made clear on debates on this topic during the passage of the recent Crown Estate Bill, it continues to be a pleasure to speak in Committee on this Bill. We should all recognise the passion that the noble Lord, Lord Wigley, has shown on this issue. I prewarn noble Lords that there will be a time during my speech when the Durham accent comes into contact with the Welsh language—so just beware of that.

I thank the noble and learned Lord, Lord Thomas, and the noble Lords, Lord Harlech and Lord Moynihan, for their thoughtful contributions and accompanying amendments relating to the operational framework of any devolved Welsh Crown Estate entity. I also welcome the contributions from the noble Baronesses, Lady Harris and Lady Bennett, and the noble Lord, Lord Harper.

Amendments 1 and 6 would ensure that the revenues from the Welsh Crown Estate would still be paid into the Exchequer. Amendments 2 and 8 would place parameters on borrowing. Amendment 3 would allow the Treasury to impose whatever conditions it sees fit under the scheme for ensuring the expeditious exercise of the functions of the Crown Estate in Wales. Amendment 9 would require the Secretary of State to produce a report on the effectiveness of devolving the management of the Crown Estate.

Amendments 4 and 7 would delay the transfer of the functions in respect of the Crown Estate in Wales for a period of three to seven years after the passing of this Bill, while establishing interim arrangements including requiring the Crown Estate commissioners to engage with Welsh Ministers when exercising their powers in relation to property, rights or interests in land in Wales, and rights in relation to the Welsh zone, in order to enable an orderly and planned transfer, to publish financial information about the Crown Estate in Wales and to pay the proportion of the consolidated revenue account distributable to the Consolidated Fund, which is attributable to the Welsh Crown Estate and to the Welsh Consolidated Fund.

As the House has heard previously, the Government believe that the Crown Estate as it currently operates across England, Wales and Northern Ireland provides the best outcome for Wales and the wider United Kingdom. Devolution of the Crown Estate would risk fragmenting the energy market and delay our progress towards net zero. The Crown Estate has played a critical role in positioning the United Kingdom as one of the most significant global markets for offshore wind over the past 20 years. It has also helped to position Wales at the forefront of clean energy technology and growth, with North Hoyle offshore wind farm becoming Wales’s and the United Kingdom’s first major offshore renewable energy project in 2003 during leasing round 1. Subsequent leasing rounds, including round 4, are delivering offshore wind benefits to Wales.

More recently—in fact, last month—in a boost to the United Kingdom’s clean energy transition, the Crown Estate announced that through its capacity increase programme, seven fixed-bottom offshore wind farms will increase the amount of power produced by offshore wind by adding turbines to projects already at sea. This includes Awel y Mor in north Wales. In addition, the ongoing offshore wind leasing round 5 for floating offshore wind in the Celtic Sea is expected to deliver significant jobs and supply chain benefits to local communities in Wales and the south-west.

The benefits of these projects are felt in the local communities and supply chains across Wales. For instance, the Crown Estate recently invested £1.2 million in Welsh tidal stream energy through the Morlais demonstration zone. Owned and managed by Ynys Môn social enterprise Menter Môn, the Morlais tidal scheme is set to become the largest consented tidal energy project in Europe.

The recently passed Crown Estate Act, which has broadened the scope of the Crown Estate’s investment and borrowing powers, means that it is uniquely placed to drive forward growth-generating projects in Wales. But this is not all that the new Act achieves. As noble Lords will remember, the Government were pleased to support the amendment of the noble Lord, Lord Hain. This was a thoughtful and positive step that will see the appointment of two additional Crown Estate commissioners, each with an additional responsibility to advise on conditions in Wales and Northern Ireland respectively. This will ensure that the board continues to work in the best interests of Wales while delivering its statutory duties as set out in legislation.

It takes time to set up new processes for such appointments. However, I would like to reassure noble Lords that the Treasury is working on plans for these appointments to ensure that they fit the public appointments recruitment process and comply with the governance code. An important feature of those appointments is that the devolved Governments reserve the right to be consulted on them.

Some noble Lords have argued that Wales would benefit financially from devolution of the Crown Estate. Let me set out why the Government do not believe this to be the case. The funds generated by the Crown Estate’s activities across the UK—more than £4 billion over the last decade—already benefit Wales in two ways. First, those Crown Estate revenues support UK Government spending on vital public services in Wales in reserved areas. Secondly, in areas which are devolved to Wales, when the UK Government fund spending in England, the Welsh Government receive funding through the Barnett formula.

Even if devolution could be achieved without risking the revenues generated in Wales, this would not automatically lead to an increase in available funding to the Wales Government. For example, in the case of Scotland, where the Crown Estate is devolved, the Scottish Government receive a block grant reduction to reflect the profits they retain from Crown Estate Scotland following its devolution.

To answer the point made by the noble Baroness, Lady Harris, in previous debates noble Lords questioned why the Crown Estate does not report on income generated in Wales. The noble and learned Lord, Lord Thomas, spoke particularly passionately—I thank him for his contributions—including today on the third amendment. Following the case put forward at Second Reading, the Crown Estate met with the noble and learned Lord to explain in more detail the challenges involved in reporting separate capital and revenue accounts according to administrative and geographical boundaries. However, the Crown Estate recognises the desire for greater understanding through a Wales lens and has committed to review reporting for Wales in its 2025-26 annual report and accounts. I thank the noble Lords from across the House for their engagement on this matter.

Finally, in response to the noble and learned Lord, Lord Thomas, and just to make the position clear, the Government will continue to discuss these issues with the First Minister and the Welsh Government to ensure that Wales sees the full benefits of the Crown Estate.

--- Later in debate ---

[Lord Sandhurst (Con)]

My Lords, I will speak briefly to Amendment 5 in the name of the noble and learned Lord, Lord Thomas of Cwmgiedd. He has made thoughtful and powerful contributions to our debate today, not least—as he has said—as a strong supporter of the union.

Amendment 5 would create a framework for powers to be granted to enter into agreement with the Crown Estate commissioners for the performance of specified matters in relation to the management or investments of the Welsh Crown Estate by Order in Council. I have listened carefully to the noble Lord’s arguments, and he has made a powerful case for his amendment. However, as I said in my more general remarks to the previous group, we have serious concerns about the direction set by this Bill. Now is not the time to take forward proposals for devolution of the Welsh Crown Estate.

That said, if this Bill is to go forward, we hope the noble Lord, Lord Wigley, will listen carefully to constructive remarks made by the noble and learned Lord, Lord Thomas of Cwmgiedd, and my noble friends Lord Harlech, Lord Moynihan and Lord Harper.

[Lord Wigley (PC)]

My Lords, as I indicated when I spoke previously, I would be minded to accept this amendment if it was moved on Report.