Crown Estate (Wales) Bill [HL]

Lord Moynihan Excerpts

2nd reading
Friday 7th February 2025 Lords Chamber

[Lord Moynihan (Con)]

My Lords, I too congratulate the noble Lord, Lord Wigley, on introducing this Bill and for the many decades that he has eloquently, and with no less a degree of commitment, sought to represent the people of Wales and serve their best interests. It is also a great pleasure to follow the noble Lord, Lord Murphy. I know this as someone who was educated in Wales and was, for the past three years, chair of Haberdashers’ Monmouth School and a long-standing president of Welsh Rowing.

I should also declare my interest in Wales as set out in the register. I chair Amey, which has worked hard to ensure the successful electrification of the Core Valley Lines radiating out of Cardiff. I also chair Acteon, which is a subsea service company that has an active global interest in offshore wind, providing seabed-to-surface sustainable energy solutions for offshore wind.

My view is that, to maximise economic growth in Wales and generate employment in sustainable energy technologies, now would not be the best time to pursue this Bill. I emphasise “at this time”, because I would favour the Government entering into discussions with Wales in due course. I hope they will make it clear that any discussions on devolving the Crown Estate to Wales must not conflict with their priority in the five-year plan to increase the proportion of the UK’s energy generated from renewables to decarbonise the UK’s electricity system by 2030.

Investors look for stability. Growth is generated and new jobs are created only if there are two foundations in place: a stable policy framework and strong financial support with backing from government. The establishment of Great British Energy is under way and understood by investors. The publicly owned clean power company will work with the private sector to encourage greater investment in renewable energy, including offshore wind, which is so important to Wales. Similarly, the Crown Estate Bill underlines the Government’s commitment to support the development of offshore wind projects in seabed areas held by the Crown Estate. Time is of the essence to meet these targets and we need to increase grid capacity now to achieve the rapid expansion of offshore wind energy.

One major hurdle to these ambitious goals would be a minimum of three years of uncertainty; this would happen if we passed the Bill in this Session, for that is how long it took in Scotland. As we know, the process for Scotland was very complex and destabilising for investors. There were significant hurdles to overcome and they all took time: the legal and constitutional challenges; clarifying which functions could be devolved; and ensuring compliance with existing laws, which proved intricate. Assessing how revenues from Crown Estate assets would be managed and distributed in Scotland took a long time. Determining the value of Crown Estate assets and how they would be managed after the transfer was a significant challenge. Engaging with all the stakeholders, including local communities, businesses and environmental groups, was crucial and challenging, as differing interests had to be balanced in the management of assets. The Scottish Government then had to build the capacity to manage the new functions effectively, which involved training new staff and developing new management frameworks. Finally, but self-evident from the debate, the transfer was politically sensitive, with differing views among the political parties on how Crown Estate functions should be managed and by whom. All of that added to the time involved and the complexity of the process.

Further, there is a significant difference in this Bill. It is the wish of the noble Lord, Lord Wigley, that the legislation be subject to scrutiny by both Houses of Parliament and the Senedd. This additional level of approval will take yet more time, and the Delegated Powers Committee brought to our attention in its report that it did not consider scrutiny of the power by the Senedd appropriate.

It is not that I do not favour entering into discussions in due course, but it should not be at a time when it is so important to encourage investors to come into Wales. All this means that there would be less clarity for those investors today. More troublingly, even if the noble Lord, Lord Wigley, put into the Act that it would come into effect three years after it passed, there would be investor uncertainty, which would be damaging. These years of uncertainty would be an inevitable consequence of a move to devolve the Welsh Crown Estate and would need to be factored into investors’ assessments. I fear that they would steer investors away from Welsh waters to other parts of the UK, to the detriment of research and development jobs in Wales, employment opportunities in Wales, which I passionately believe in, and the Welsh ecosystem of business associated with developing wind farms offshore, particularly now when there is so much attention on offshore floating wind opportunities, on which decisions are to be made over the next three years.

I am not arguing that the policy, long advocated by the noble Lord, Lord Wigley, and echoed today by the noble Lord, Lord Murphy, should not be considered in future. It should be, but not at this critical time for the net-zero policy of this Government. I fully understand the political will to devolve the Crown Estate to Wales, but the arguments are currently outweighed by the potential risks to the UK energy market and investor confidence in Wales. Let us grasp the very real opportunities together and work for the success of Wales in the offshore wind energy market. I have never been more optimistic about the potential for Wales. Sadly, if it is introduced now, I see this Bill only damaging that prospect. Its time will come, but not now.

Crown Estate (Wales) Bill [HL]

Lord Moynihan Excerpts

Committee stage
Friday 6th June 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

In response to the noble Lord, Lord Harlech, I note that Wales has a democratic electoral and political system, unlike Westminster, where we have a Government who won the support of 34% of voters and are now in control. If he is looking for a democratic distribution of resources, he is a lot better off in the Senedd than in Westminster.

I was about to finish, so I repeat that the Wales Green Party strongly backs this Bill and opposes the amendments. More power to Lord Wigley’s elbow.

[Lord Moynihan (Con)]

My Lords, I will speak to Amendments 2, 3, 8 and 9, which are in my name, and explain why I oppose Clause 1 standing part of the Bill. I declare my interests as set out in the register, particularly my chairmanship of Amey and Acteon; although they are not contracted in offshore wind projects in Wales, they work in this space worldwide.

Before I concentrate on my amendments, I place on record the considerable sadness I have in finding myself in opposition to the noble Lord, Lord Wigley, who saw me through my Back-Bench and ministerial career in another place. I have always viewed him as a trusted friend and outstanding politician, and he is recognised as such across both sides of both Houses. I put that down to the English influence on him, which, if I am not mistaken, came from his birth in Derby and education in Manchester.

Amendments 2 and 8 seek to ensure that the Bill is in line with the same borrowing limits as the Crown Estate. Ostensibly, it is reasonable to ask why such borrowing limits are prudent. The answer is that there is considerable political, strategic and commercial risk associated with devolving and transferring the functions of the Crown Estate in Wales to Welsh Ministers.

The most recent publicly available figures for asset values in Wales are from the August 2023 freedom of information request, which stated—in property values in sterling—that offshore wind and marine accounted for some £793 million out of a total of £853 million of assets. Our focus is therefore on those offshore opportunities—particularly but not exclusively wind—with marine energy being some 93% of those assets. That is what we need to focus on when considering this Bill. Taking a 25% debt-to-asset value would mean borrowing up to £213 million, which would need to be against Welsh assets to that value. Currently, as I understand it, Crown Estate Scotland does not have access to borrowing powers, so even if my amendment were accepted, this would create further asymmetry of opportunity.

The difficulty of making sense of these figures, and therefore the security required for borrowing, is further compounded by a number of economic factors. The first is the creation of global instability in the sector. The international renewable energy market is experiencing that instability, no small part due to the changes of US tariff and green subsidy policies. In challenging global conditions, it is crucial that the UK market can present a united and stable environment to give confidence to investors in the sector and developers to commit their capital and their projects in the UK.

However, there is already difficulty in doing so. For noble Lords following this area of net zero, the Ørsted cancellation of Hornsea 4 only last month because of the economics of the project proves just how volatile and uncertain the sector is at present. The benefit of the current structure of the Crown Estate is an ability to balance investments and reduce risk exposure across England and Wales, ensuring more robust and sustainable growth in a way that a devolved Welsh entity would struggle to replicate at the pace necessary to capitalise on the immediate opportunity that exists. Neither balance sheet strength nor economics of scale would exist if this Bill went through. Any further fragmentation could signal political and regulatory uncertainty, reducing the UK’s attractiveness as a destination for clean energy investment and harming both the Welsh and the broader UK economies.

My second point, and the second reason behind the amendments, is that the UK systems-wide approach to tackling energy security and the net-zero ambition of the Government gives a basis to the fact that the Crown Estate is, first and foremost, involved with the energy transition across the UK and in Wales, and with the development of offshore wind in particular and ground-breaking new technologies, which are even more risky, particularly the ones that are considered for floating offshore wind generation in the Celtic Sea. In this context, the UK’s transition to renewable energy, particularly offshore wind, requires a highly co-ordinated approach. Fragmenting seabed management through devolution would disrupt the collaboration currently in place between the Crown Estate, the National Energy System Operator and the UK Government. This could delay grid connection decisions and undermine the strategic coherence of the contracts for difference auctions. My genuine belief is that a transfer to Welsh Ministers would be counterproductive to the Welsh economy—which is what we should be thinking about in the context of this Bill—Welsh jobs and growth in the sector.

I would like briefly to address the comments of the noble Baroness, Lady Bennett. The Celtic Sea—what we are talking about at the present time—and the role that the Crown Estate can play in de-risking and stimulating the supply chain in those projects is critical. I am afraid that those who believe in transferring the Crown Estate assets from the UK back to Wales may find themselves misguided if they feel that the Welsh acreage of the Celtic Sea represents some sort of 530 carat Cullinan diamond—the great star of Wales.

The reality, as I found to the cost of many months, if not years, of negotiation as Minister for Energy in another place on the Frigg treaty—which went across the median line of Norway and the UK—is that the proposed Celtic Sea developments create a similar issue, with a pretty even split between English and Welsh waters. The delineation is highly complex; it is not a straightforward North Sea divide. If you look at a map, you see that there is a kaleidoscope of different ownership interests, and fragmentation of the control of the project would be counterproductive, in my view. It would take more time, it would be economically inefficient, and it would be politically sensitive if two different organisations were trying to make sure that that economic opportunity—which would benefit the people of Wales, as well as the people of the United Kingdom—was curtailed or sent into a political quagmire of negotiations and differences.

The round 5 project development areas in the Celtic Sea are equally important to both the south-west of England and to Wales. That is a critical factor when you consider the scale of this project in the totality of the Crown Estate assets. With this scale in mind, it is important to reflect on the integrated and complex nature of the supply chain which would back up that project. It is unrealistic to expect that every component of the supply chain would be available in Wales.

That is the reason I tabled these amendments. It is not just the major port of Port Talbot which is critical to the Celtic Sea leasing round; Bristol is equally important. Transfer operations in Wales could create jurisdictional and logistical bottlenecks, impeding the rollout of offshore wind infrastructure. My concern, and my reason for tabling these amendments, is not principally political; it is to make sure that there is no inhibition to the development of these interesting opportunities, particularly the offshore opportunities that exist, which will benefit the people of Wales and the people of the south-west.

The evidence presented in the Future of Offshore Wind illustrates that the majority of future opportunity in the Celtic Sea is further away from the Welsh coast and not in Welsh water. I add that an aspect of this is covered by Northern Ireland as well, so there is a triple lock on this project which would need to be looked at. That is the reason I tabled my amendments. The Welsh coastline presents a significant opportunity, regardless of the position of projects in the seabed. It is in the best interests of both Wales and the Crown Estate to ensure this potential is fully realised, so that coastal communities can benefit from the offshore resources. It is important to contrast this, for example, with the Scottish seabed and Scottish waters, which are materially distinct, creating no operational overlaps nor conflicting regulation and contrasting financial systems.

Finally, I emphasise my beliefs not only that this is important, as was heard during the passage of the then Crown Estate Bill, but that the operational independence of the Crown Estate is critical in enabling it both to maximise the economic opportunities and to take an apolitical, long-term decision in line with its statutory purpose. Imposing oversight from Wales through either Welsh Ministers or the Treasury would have a significant impact on the abilities of the commissioners to carry out their functions and to create both lasting, shared prosperity for the nation and jobs in Wales. Although this Bill is ostensibly attractive, without any amendments it would be economically disadvantageous to Wales; that is my main driver.

For those reasons, I speak to the amendments in my name. I do not have time to cover the last one; suffice it to say that I think that, if we pass this Bill, there would be real benefit in having after one year a review not just of what has happened in Wales but, potentially, of what has happened in Scotland as well.

--- Later in debate ---

[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.

[Lord Thomas of Cwmgiedd (CB)]

I will briefly reply. There is a difference between what I have put forward and what the noble Lord, Lord Moynihan, suggests.

I thank everyone for listening patiently to what I had to say. I believe that, at the end of the day, as one sees across the world, we must recognise the importance of what is stirred up by nationhood. It is important to try to analyse the way in which economic benefits can be conferred. I have listened to all the arguments, and it still seems to me that the compromise which I put forward—namely, to recognise nationhood and national aspiration but to co-operate to provide economic benefit—is something for now and not for some distant time in the future. Having listened to all the arguments and hearing the views of the Committee, I beg leave to withdraw my amendment.