Crown Estate (Wales) Bill [HL]

Lord Wilson of Sedgefield Excerpts

Friday 6th June 2025 Lords Chamber

[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.

[Lord Wigley (PC)]

My Lords, I am very grateful to all colleagues who have participated in this debate. We are in Committee and therefore I am not going to be tempted towards the general arguments that have arisen from several directions over the past hour or so. I thank the noble Baroness, Lady Harris, for coming in from a distance, the noble Baroness, Lady Bennett, for her contribution, the noble Lord, Lord Harlech, for moving the amendment, and the noble Lords, Lord Moynihan, Lord Harper, Lord Sandhurst and Lord Wilson. and the noble and learned Lord, Lord Thomas, for speaking to his amendment, and from whom we may hear more in a moment. Have I covered everybody? I hope so. I am very grateful to everyone who has participated.

It might assist colleagues, particularly those who do not live in Wales and may not keep up with every twist and turn in Welsh politics, to know that, by now, of the 22 Welsh local authorities, of a whole range of political allegiance—and some have no overall political control—21, all but one, have passed resolutions calling for the devolution of the Crown Estate to Wales. This has been supported by Plaid Cymru, Labour and the Liberal Democrats, and I believe even accepted by some Conservative members and Reform UK councillors, who are only too aware of the current feeling of injustice in Wales in this regard.

Mention has been made of the windmills in the sea to the north of north Wales. Noble Lords who watched “Question Time” last night will have noted that the largest round of applause in the programme came when the suggestion was made that Wales should benefit from all those windmills that take up the horizon to the north of Llandudno, along the coast by Colwyn Bay, Prestatyn and Rhyl. There is very strong feeling about them, and that is why 21 out of 22 councils have passed resolutions in support—and I have little doubt that there is sympathy also in the 22nd, which has not.

In considering the amendments before us today, I hope we will bear these background points in mind. By all means, let us improve the Bill by debating amendments and, if appropriate, passing them on Report. But I urge that the Bill be approved by this Chamber and it would then be a matter for those in the other place to come to a resolution on it in due course, if they are prepared to make the time available, so that they can at least address the strong feelings of an overwhelming majority of Welsh councils.

I have noted the comments made by the Delegated Powers and Regulatory Reform Committee in its report last January, that the powers conferred by new Section 52A of the Wales Act 2017 should be subject to scrutiny solely by both Houses of Parliament. While I understand the logic of that viewpoint, I personally would have preferred to have an even-handed approach that enabled the Senedd to voice an opinion. However, I note that the Scottish Parliament were not afforded such an opportunity, and if that were the only issue at stake, I would of course accept an amendment to that end, to facilitate the progress of the Bill.

I will now address the first group of amendments, starting with Amendment 1, which was moved by the noble Lord, Lord Harlech. Amendment 1 seeks, in the words of the presenters of this amendment, to direct the moneys raised by the Crown Estate in Wales to the coffers of the Treasury, and not to the Government of Wales. This is nothing less than undermining the fundamental objective of the Bill, of course, and as such does not improve the Bill, but in effect works out as if the Bill had been refused a Second Reading.

This seems to me to be a back-door way of blocking the Bill and I would be grateful to know whether those who tabled this amendment have secured the agreement of the leader of the Welsh Conservative Party on this matter. If indeed Darren Millar MS has agreed to such a ploy, it is an issue about which the voters in Wales in various Senedd elections will certainly be aware. Let every voter be aware that the Tory party wants the resources of Wales to be put into the control of faceless Treasury mandarins rather than the elected representatives of Wales. My political friends in Wales have experienced this in both the Senedd and the National Assembly, to the dismay of elected Members of all parties.

I will give a specific example of that experience, which Wales suffered at the sticky hands of the Treasury in Whitehall. Between 2007 and 2011, the Labour-led Welsh Government, to their huge credit, attempted to avoid the fiasco of a year-end stampede to spend revenue moneys before the end of the financial year on any scheme that may be at hand, irrespective of whether such expenditure represented the best value for money. Everyone knows that this still happens the length and breadth of these islands. Despite a tightening of the rules, the Treasury has not sorted that out. So, 20 years ago, the Welsh Government devised a scheme whereby they accumulated all the year-end revenue underspends into a capital fund, which was allocated to worthwhile projects such as building schools and hospitals. Between 2007 and 2011, they accumulated some £400 million—a process that the then Labour Government at Westminster accepted.

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[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.

[Lord Wilson of Sedgefield (Lab)]

My Lords, as I have already set out, the Government believe that the Crown Estate, as it currently operates across England, Wales and Northern Ireland, provides the best outcomes for Wales and the wider United Kingdom. I will not repeat the arguments I set out earlier in this debate.

I thank the noble and learned Lord, Lord Thomas, again for his considered contributions to this debate. The amendment we are debating now—Amendment 5 —would permit the Crown Estate commissioners to exercise specified management and investment functions on behalf of Welsh Ministers.

I remind the House that existing statute provides the Crown Estate with independence and autonomy to set and achieve its goals. The Government believe that the Crown Estate should continue to operate in this way—as a commercial business independent from government—because it has shown itself to be a trusted and successful organisation with a proven track record in effective management. Even if the proposal in this amendment was being suggested for the Crown Estate in its current form, it would be important to ensure that independence was preserved in respect of any functions it took on behalf of Ministers.

More broadly, as I previously set out, 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.

[Lord Moynihan (Con)]

Before the noble and learned Lord, Lord Thomas, winds up, I completely endorse and agree with his views about co-operation. There is no doubt whatever that it is vital in the relationship between Wales and the United Kingdom in this context.

My arguments have not been principally political at any stage during Committee. My argument is that the lion’s share of the Crown Estate’s assets in Wales requires to be maximised in terms of economic value to Wales, and that there should be the overarching control and involvement of the Crown Estate as is currently set up. I believe that would be the most efficient and efficacious way of maximising the value of those assets in the Celtic Sea, and that was the reason that I pushed this argument so strongly, and not because of future political arrangements. After that project comes to fruition and benefits all concerned, there may well be an opportunity to look at the political realities that have been put forward by the noble Lord, Lord Wigley, and the noble and learned Lord, Lord Thomas.

I think that is the reason that the Government have taken the position they have, and I endorse it strongly: it is a cross-party view, but it is one that is driven—from my perspective—on the economic realities of those assets in Wales at this time. We should still make sure there is maximum co-operation between all interested parties, the Crown Estate and the locally interested parties in Wales, so that the projects we have been discussing in the context of this Bill are brought to fruition to the maximum economic benefit of both the United Kingdom as a whole and indeed Wales.