Lord Wigley:

Moved by Lord Wigley

1: Clause 1, page 1, line 8, at end insert—“(4B) The functions of the Crown Estate in Wales may not be exercised without the consent of the Welsh Government.”Member's explanatory statementThis amendment would require that the Crown Estate must receive the consent of the Welsh Government before exercising its powers in Wales.

My Lords, I will move Amendment 1 and speak to Amendment 23, both of which are in my name. I am grateful to the noble Baroness, Lady Humphreys, for adding her name to the amendment, and of course to my noble friend Lady Smith of Llanfaes, who no doubt will wish to address Amendment 21 in her name, which I support. I also support Amendment 26 in the name of the noble Baroness, Lady Humphreys, which we will come to later.

At Second Reading, I outlined the case for the Crown Estate in Wales to be devolved as it is in Scotland. That is the subject of a Private Member’s Bill that I have awaiting a Second Reading debate. Although many of these amendments overlap with that fundamental approach, there are other amendments not going quite as far as full devolution proposals which, none the less, could help meet Welsh grievances regarding how it is widely seen that the Crown Estate, as currently administered, does not address Welsh needs or concerns, and, indeed, sucks valuable resources out of Wales.

This issue has boiled up further since Second Reading, with a number of local authorities in Wales that are really strapped for cash, as indeed local authorities are in England, protesting at the bill demands which the Crown Estate makes of them. Let us take as an example the position of my own local authority, Gwynedd Council. This year it is being asked to pay a staggering bill of £160,000 to the Crown Estate to permit access to and full use of its own land and facilities within its own territory. The council has to pay the Crown Estate an annual rent for access to the beach in Bangor, Barmouth and Llanaber and a staggering £144,000 a year in rent relating to the marina in Pwllheli. Access to beaches touches a raw nerve in Wales; when private citizens have tried to close a footpath access, they have triggered massive protest and have had to back down. Yet the Crown is allowed to tell us that we have to pay for use of our own land and our own coast in our own country and can charge for the use of that privilege with impunity.

Gwynedd Council now faces cutting back on other services to pay the Crown Estate. A motion was moved by councillor Dewi Llewelyn in full council meeting on 3 October, and the council resolved to refuse to pay this charge. The motion also called for the control of Crown Estate land and profits in Wales to be devolved to the Welsh Government. We await developments, but other councils in Wales are also now considering similar steps. No one can say that there has not been adequate warning that the Crown Estate issue in Wales is flaring up in the direction of taking the form of a Boston Tea Party.

Conservative Governments over the past 10 years have known that this issue has been festering, but while they accepted the need to make adjustments in Scotland, which led to the devolving of the Crown Estate through the Scotland Act 2016, the situation in Wales was left to fester. This situation has been strenuously criticised by the Labour Government in the Senedd. I will not repeat the lengthy quotation which I presented to the House at Second Reading, when I drew attention to the words of the then Labour Climate Change Minister, Julie James, who, in a nutshell, said that the Crown Estate in Wales should be devolved, as in Scotland, and that the current situation is “outrageous”. Both the former First Minister, Mark Drakeford, and our erstwhile colleague, the current First Minister, the noble Baroness, Lady Morgan of Ely, have also called for the Crown Estate to be devolved in Wales.

In moving the first amendment, we are offering the Committee, and indeed the new Labour Government, an opportunity to take a small step towards redressing the balance. This does not provide for the full devolution of the Crown Estate in Wales, but it gives the Welsh Government a veto grip over the Crown Estate by way of the words which appear in the amendment:

“The functions of the Crown Estate in Wales may not be exercised without the consent of the Welsh Government”.

The mechanisms for granting that consent—indeed, for pinpointing the issues that would need to be addressed to secure that consent—can be open to negotiation between the Welsh Government and the Crown Estate. What this does is to establish beyond doubt that our Government in Wales will have the final word on such matters.

I will briefly mention Amendment 23, standing in my name and supported by the noble Baronesses, Lady Smith of Llanfaes and Lady Humphreys, and by the noble and learned Lord, Lord Thomas of Cwmgiedd. It also provides a mechanism, short of devolving the full Crown Estate to Wales, to require the Crown Estate to pass to the Welsh Government all the net profit that it has generated from Wales; and thereby to enable the Welsh Government to pass an appropriate part of such funds to the local authorities that I mentioned to ensure that they are not out of pocket from the bills that they have to pay to the Crown Estate.

The Labour Government at Westminster should be delighted to facilitate developments provided by the amendment, which I have highlighted. If they are not, they will need to make a very persuasive case because, if these modest proposals are not acceptable, the only answer might be for the devolution—lock, stock and barrel—of the Crown Estate in Wales to Wales, as has been the case in Scotland. I welcome support for these proposals from all quarters of the Committee and I await the Minister’s response with fascination. I beg to move.

My Lords, I support Amendment 21 in the name of the noble Baroness, Lady Smith. I do so as a former Labour Secretary of State for Wales who was responsible for the 2006 devolution Act. Before that, as a Welsh Minister, I, alongside the noble Lord, Lord Wigley, and others, was closely involved in winning the 1997 referendum, which brought in the 1998 devolution Act to establish the Welsh Assembly, now Senedd. I have also lived in Wales for 34 years now.

Welsh Labour’s programme for government in the Senedd includes a commitment to pursue the devolution of powers needed to help reach net zero, including management of the Crown Estate in Wales. The Crown Estate is devolved in Scotland; surely there is no reason why the same powers should not be devolved to Wales, especially by a new Westminster Labour Government committed to partnership rather than confrontation with the devolved Administrations. That was the essence of the Prime Minister’s message to the special summit of the nations and regions last Friday, and in visiting Scotland, Wales and Northern Ireland in July within days of moving into Downing Street.

The Independent Commission on the Constitutional Future of Wales recommended that the Crown Estate be devolved, and Welsh Labour is committed to working with UK Labour in government to implement the recommendations from that commission.

Taking control of the management of Crown Estate assets in Wales would allow the Welsh Government greater autonomy over the speed and direction of the development of Welsh-sited Crown Estate property. The Welsh Government would have the opportunity to better align the management of Crown assets in Wales with the needs of Welsh citizens. The management of Crown assets also generates significant revenue to the UK Exchequer. Devolution of the Crown Estate would better align revenues from Wales with the income available for the Welsh Government to deliver on their priorities for Welsh citizens.

Marine planning is a holistic, statutory process for managing the UK’s seas including the seabed. Aligning Welsh marine planning with seabed leasing rounds for new developments, such as renewable energy, would help to ensure joined-up and plan-led decision-making.

Currently, there are stand-alone leasing rounds for certain types of activity, such as offshore wind or marine aggregates extraction. These leasing rounds, which occur from time to time, take account of relevant government policy, but devolution of the Crown Estate to Scotland has allowed a reshaping of the process, whereby the marine planning process sets the overall policy direction with leasing rounds only progressed after it has set national strategic policy. This ensures that marine management is better joined up and delivered. Taking control of the management of the seabed would allow Welsh Government Ministers both to better implement their policy decisions and priorities for the marine area and to ensure that all relevant interests can be reflected in a way that is simply not as possible with a top-heavy, centralised and London-centric agenda.

A key consideration for the devolution of the Crown Estate is, of course, appropriate resources for the Welsh Government. In Scotland, even prior to devolution in 1999, there had already been an established Crown Estate team in Scotland. However, that is not the case in Wales, so this devolution would need to come with the appropriate resource for a new team to manage Crown Estate assets in Wales.

There would also need to be agreement on how Welsh government funding through the Treasury block grant would change as a result of a new revenue stream coming to Wales from income from Crown assets. In Scotland, the adjustment to the Scottish Government block grant is set out in their fiscal framework agreed alongside the adjustment required to account for the devolution of tax powers. Presumably there would need to be a negotiated revised fiscal framework for Wales, and I accept that this will not be done right now, given the tremendous financial pressures that my right honourable friend the Chancellor is grappling with.

The final report of the Independent Commission on the Constitutional Future of Wales recommended that:

“The Welsh and UK Governments should establish an expert group to advise urgently on how the devolution settlement and inter-governmental engagement in relation to energy could be reformed to prepare for rapid technical innovation in energy generation and distribution, to ensure that Wales can maximise its contribution to net zero and to the local generation of renewable energy. The remit of the group should include advising on the options for the devolution of the Crown Estate, which should become the responsibility of the devolved government of Wales as it is in Scotland”.

The commission found that Welsh and UK Governments’ overlapping responsibilities on energy would work much better with stronger consultation and co-operation, with the Welsh Government as an equal partner. The commission concluded that:

“Energy generation and distribution is an area where the binary devolved or reserved nature of the devolution settlement does not sit easily with the practical realities of delivery”.

Huw Irranca-Davies, Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, told the Senedd on 17 July 2024, that

“we really welcome the opportunity to collaborate now with the UK Government on the proposals and the progression towards the devolution of the Crown Estate in Wales, which remains our aspiration. There are details that have to be worked out on that as well, but I think the positive engagement that we’ve seen so far from the UK Government on maximising the benefits of the way that the Crown Estate operates currently within Wales bodes well for the future”.

In addition to what he said, Rebecca Evans, then Cabinet Secretary for Economy, Energy and Planning, said on 10 July 2024 in the Senedd:

“The Welsh Government has been very clear that we accepted all of the recommendations of the constitutional commission’s report, and we still absolutely accept those. And there are several things for us to be getting on with in that report, such as .... our position on the Crown Estate”.

The Welsh Government added:

“Our longstanding position is that the Crown Estate should be devolved to Wales in line with the position in Scotland. We have been clear that the current devolution settlement for energy limits our ability to deliver policy in Wales in a way that reflects our policy priorities and the needs of future generations. We welcome .... the broader emphasis on improving intergovernmental relations given the interactions between UK government policy and devolved policy with respect to energy and climate change”.

Welsh Labour’s case is that devolving the Crown Estate is vital so that profits from leasing land for energy projects can be retained in Wales as they are in Scotland.

I understand that it has been argued in the past, on behalf of the previous Conservative Government, that introducing a “new entity”—as they described it—to manage the Crown Estate in Wales would

“fragment the market, complicate existing processes, and likely delay further development offshore, undermining investment in Welsh waters”.

Frankly, that reflects old, centralised, conservative, anti-devolution Whitehall thinking.

I hope that there will be fresh thinking from this new Labour Government, although I fully recognise that the impossible financial predicament inherited from the bankrupt Tory Government means that finding the money to devolve management of the Crown Estate to Wales at this time would be very difficult. I also understand that this matter is not currently a priority, given all the other matters on health, education and local government that certainly are. I hope, therefore, that my noble friend the Minister, when he replies, will give me some encouragement that discussions will now take place with Welsh Labour First Minister Eluned Morgan—my noble friend Lady Morgan—and her colleagues on their firm desire to see powers over the Crown Estate devolved to Wales in the future, as they have long been in Scotland.

My Lords, my Amendment 21 is included in this group. I endorse the contribution made by my noble friend Lord Wigley in making the case for the other amendments in this group, and thank him for supporting my amendment. I will now speak to Amendment 21.

I spoke at Second Reading outlining why the Bill, as drafted, does not deliver fairness for Wales. Therefore, I will not repeat my case today. However, I will highlight that at Second Reading there appeared to be a sense of agreement from around the House that Wales was not being treated fairly when it comes to powers over the Crown Estate—in particular, the stark contrast between the powers given to Scotland but not to Wales.

Amendment 21 simply aims to resolve this unfairness and would transfer the management of the Crown Estate in Wales to the Welsh Government within two years of commencement of this Act. Devolving these powers would also support the Welsh Government in the delivery of policies in the areas already in their control, such as energy and the environment. This lever would open up more opportunities to deliver for the people of Wales. I am grateful to the noble Lord, Lord Hain, for his support of this amendment and for his contribution, and to the noble and learned Lord, Lord Thomas of Cwmgiedd, for adding his name to it.

A move to devolve this power is supported by many in Wales, including senior colleagues in Wales of the new Labour Government here. Additionally, the Independent Commission on the Constitutional Future of Wales also recommends that the devolution of the Crown Estate is progressed, as the noble Lord, Lord Hain, outlined. Campaigning for this change has heated up across all parts of Wales in recent months. In addition to Cyngor Gwynedd’s motion, which my noble friend Lord Wigley raised, we have seen similar motions passed by Swansea Council, and I expect momentum to build across Wales if no progress continues to be made. This amendment offers this Committee and the new Labour Government an opportunity to make that progress, right this wrong and deliver fairness to Wales.

This amendment goes hand in hand with Amendment 23 in this group, which I support, as Wales must also receive the profits that result from the use of the land in Wales. These profits should be invested directly into the communities of Wales. I welcome support for this group of amendments from all corners of this Chamber, and I look forward to hearing the Government’s response.

My Lords, unusually, as a former Treasury official, I am generally in favour of greater devolution—the more so when the likes of the noble Lords, Lord Hain and Lord Wigley, and my noble and learned friend Lord Thomas support a proposal. But on this occasion I fear I should advocate a degree of caution.

I speak having been in the Treasury when the Crown Estate in Scotland was devolved. With hindsight, I think that was a mistake, particularly because there is considerable benefit in looking at offshore wind policy at a UK level. Indeed, the then Government missed a trick. They should have followed the example of I think the Wilson Government in the 1960s, who hived off oil sea exploration from the Crown Estate. The then coalition Government should have hived off offshore wind from the Crown Estate, not least because it gives the Royal Family, who no doubt are a deserving cause, a massive windfall, as my noble friend Lord Turnbull pointed out at Second Reading.

Although I very much understand the case that noble Lords have made on both sides of the House, I think this is something that should not be rushed. There may be a case for devolving further powers to Wales, not least because there is a case for giving Wales similar treatment to Scotland. But if the Government are sympathetic to this amendment, I encourage them to spend a bit more time working through whether there are unintended consequences and, in particular, looking through the financial implications. One thing I would not want to see happen is Wales being disadvantaged financially by devolution. This might be the right thing to do for the longer term, but I encourage the Minister to think twice before agreeing to it today.

My Lords, I apologise to your Lordships for not having taken part in the Second Reading debate. I also draw your Lordships’ attention to my registered interests and my membership of the board of Community and Voluntary Support Conwy, CVSC.

I rise to speak to Amendment 26 in my name and Amendments 1, 21 and 23 in the names of the noble Lord, Lord Wigley, and the noble Baroness, Lady Smith of Llanfaes. My Amendment 26 calls for the devolution of the Crown Estate’s powers to Wales and would require the Treasury to devolve Welsh functions of the Crown Estate commissioners to Welsh Ministers or a person nominated by Welsh Ministers.

There are increasing calls within Wales for the devolution of these powers. It is a policy of my party, the Welsh Liberal Democrats, having been debated and agreed in our Welsh conference in 2023. It would ensure that the profit from offshore energy lease agreements stays in Wales.

In July 2023, Senedd Members voted by a majority of 35 to 13 in favour of a Plaid Cymru debate calling for the devolution of the Crown Estate to the Welsh Government. As we have heard, there are similar calls at local government level. Last week, as the noble Lord, Lord Wigley, detailed, councillors in Gwynedd Council debated a motion asking their chief executive to open negotiations with the Crown Estate over “access fees”. The council paid its annual fee of £161,000 to the Crown Estate in 2023 to allow public access to beaches in Gwynedd, of which £144,000 was paid to allow access to Hafan Pwllheli marina. Councillors also believed that responsibility for the Crown Estate should be devolved to the Welsh Government, with their motion stating:

“Any profits generated by the Crown Estate, here on Welsh lands and waters, should remain in Wales, for the benefit of our residents and communities”.

In addition to all this, social media videos provide information about the Crown Estate and explain why the promoters want change, leading to greater awareness of the issue among the public.

The Crown Estate owns land estimated to be worth more than £600 million in Wales. This includes 65% of the coast of Wales and 300,000 acres of land, including any gold and silver on it. Profits on these numbers are unclear, however.

Let me be clear: there is no criticism of the Crown Estate commissioners implicit in this amendment. The commissioners operate within a system that was established 63 years ago but with a history going back to 1760, and they cannot diverge from the status quo without an Act of Parliament similar to that which devolved similar powers to Scotland in 2017. So, while the commissioners operate the system from the 1960s, history for us in Wales has moved on. Devolution has opened the eyes of the people in Wales to the opportunities and responsibilities that the new order has brought.

My colleagues and I are ambitious for Wales. We envisage a Celtic Sea powerhouse, building on the success of renewable energy projects around our coast. We see how the offshore wind industry offers the potential to help revive local economies in coastal communities. We see the need to develop the production of wind turbines within Wales, taking advantage of the industrial infrastructure already in place. However, we want those decisions about the use of our resources to be made in Wales by our politicians.

My Amendment 26 has a similar outcome to Amendment 21 in the name of Baroness Smith of Llanfaes, but mine does not include a timeframe for the transference of powers to the Welsh Government. The report of the National Infrastructure Commission for Wales asserts:

“By 2030, The Crown Estate’s functions in Wales should be completely devolved to a new body that has as its principal aim the reinvestment of all funds in Wales for the long-term benefits of the people of Wales”.

“By 2030” is a timeframe I am more comfortable with; it allows time for the Welsh Government to persuade the UK Government of the merits of their case. I hope that the party that gave us our valued and, some would say, precious devolution settlement will be in listening mode and introduce the necessary legislation. It is of course disappointing that no discussions have taken place between the two Governments prior to the introduction of this Bill. Perhaps the Minister can update us on the situation, if other discussions have taken place.

The next Welsh general election, in 18 months’ time, will herald a new, larger Senedd with an improved capacity for more efficient scrutiny and the potential to take on more responsibilities and powers. Like all Governments, whether they have been in power for 14 years or merely 100 days, the Welsh Government have had to deal with serious issues and unforced errors over recent years. The criticism of their running of the Welsh NHS will inevitably have an impact on those who work in it. As we wait for improvements in the Welsh Government’s performance, I pay tribute to the doctors, nurses and ancillary staff who work in our GP surgeries and hospitals and in the community. They save lives and make lives better every day, sometimes in difficult circumstances.

Whatever the composition of our new Senedd, I hope that the increase in Members will mean a return to the surefootedness of earlier years, when the National Assembly, as it was then, dealt efficiently and competently with EU objective 1 funding. Our enlarged new Senedd will have the confidence to carry out an increased number of functions, including the devolved Welsh functions of the Crown Estate commissioners. Many of us will continue to press for the devolution of further powers to Welsh Ministers, including the devolution of justice. Over 25 years we were told that devolution is a process, not an event. I hope those words come to fruition.

My Lords, I rise briefly to support the amendments in the names of the noble Lord, Lord Wigley, and the noble Baroness, Lady Smith Llanfaes, respectively. I do so, following what has been said by a number of others on some detailed points, because there is an important constitutional issue and an interesting constitutional test for this Government.

It seems clear to me that in our union, it is accepted as things stand that the Crown Estate is not a union function. That is shown by the fact that it has been devolved to Scotland and therefore is quite unlike monetary policy, defence or other matters that are union functions. I see the powerful argument, advanced by the noble Lord, Lord Macpherson, that our constitution should be slightly different—that this should be seen as an energy issue and reserved to the central Government—but this is not the current position and we must address things as they are. Therefore, it is very clear that when the Government look at this question, they must do so from the point of the constitution. This is a power capable of devolution and the question therefore arises, if it can be devolved to Scotland, why is it not devolved to Wales?

It is also important that we stand at a turning point in devolution. I had hoped, and still hope, that the advent of this new Government means that we think for the first time in a long time about the structure of our union—that we look on it as something that should be based on principle and good co-operation between the nations. The latter is extremely important in this policy area, bearing in mind the current constitutional structure. I keep on using the word “constitutional” because we sometimes forget that what is critical to our country is good governance based on a sound constitution.

It is said by the Scottish authority that runs the Crown Estate that they

“invest in property, natural resources and people to generate lasting value for Scotland”.

Why cannot that be given to Wales? It has been said in the past that the Welsh are not up to it, or that London knows better. I am delighted that those arguments are not being run, and I hope they are consigned to the dustbin of history. However, the Minister said the following on Second Reading:

“devolving … would significantly risk fragmenting the energy market, undermining international investor confidence and delaying the progress towards net zero by … 10 to 20 years, to the detriment of the whole nation

That is similar to what the noble Lord, Lord Hain, quoted in relation to the position of the last Government. So much, possibly, for new thinking.

It is important to analyse those phrases; there is no evidence to support any of them. I hope it is not unkind to say that the use of the phrase “undermining investor confidence” is often the resort of a politician in distress. Even if there was anything in any of these points, their argument does not touch on the issue of principle: that the management of the Crown property in Wales, historically acquired by the English Crown from the Welsh people, should be for the people of Wales and the money obtained should be transparently accounted for as a distinct amount and used for their benefit, in a way decided by the Government of Wales.

Those are two key points of the devolution of the Crown Estate: management and money. If it is good enough for the Scots, why is it not right for the Welsh? It will be interesting to see how the Minister argues that specific point of constitutional principle.

The Minister knows, from his own considerable experience, that it is of course possible to run things in co-operation. What is promised by this new Government is a new approach to the union: co-operation between the Governments in Edinburgh, Cardiff, Belfast and London. If there are benefits from matters such as gearing up together to deal with the energy market then that is possible through joint ventures or other arrangements, but it in no way detracts, it seems to me, from the issues of principle—that the management of property in Wales should be for the Welsh Government and the money should go back to Wales.

In relation to that, as someone who comes from the industrial area of Wales, I know it is important to recall what happened in the last century and the century before last. Wales possessed enormous mineral wealth that drove the supplies of energy which powered our industrial revolution. Let us hope that now that there are alternative means of generating the power that is driving our present economy, the people of Wales will not be short-changed as they have been in the past.

My Lords, as a follow-on to what the noble and learned Lord, Lord Thomas, said in relation to Wales, if the Crown Estate is devolved to Scotland, why should it not be devolved to Northern Ireland? The Crown Estate plays a critical role in the stewardship of our seas and terrestrial environment. As well as large landholdings, the estate manages the seabed around England, Wales and Northern Ireland, along with 50% of our coastline, and it will support the tripling of the electricity sector’s capacity, with the deployment of 125 gigawatts of offshore wind by 2050.

During Second Reading, I pointed out that, in the Northern Ireland context, the electricity industry is managed on an all-island basis, north-south, through the all-Ireland electricity market. I received a very helpful response from the Minister, my noble friend Lord Livermore, in relation to this issue. Could he give some thought to the devolution of the Crown Estate to Northern Ireland, in the context of the electricity market and how the electricity supply is managed? Can he say whether there will be a connection and co-operation with the Irish Government on the Great British energy market and the all-Ireland energy market and the Irish Sea?

My Lords, briefly, I support these amendments. I get involved, along with many other noble Lords, in offshore energy issues, particularly in Cornwall. I can see a time coming when there will be enormous pressure on central government as to where these great big tanks—the floating windmills or whatever you want to call them—are manufactured, where they are located, from where they are serviced and, probably most important of all, where the power lines come ashore. There has already been lots of talk about Port Talbot as the only possible place for their manufacture for the south-west. There is lots of flat land there and it is probably very good, but, living in Cornwall, I would like to make sure that some benefits come to the ports in Cornwall from some of those issues.

It would seem, from what many noble Lords have said, that there is a strong argument for drawing a line down the Bristol Channel out to the medium and sticking to it, then using that line for any kind of debate or discussion that takes place on offshore oil or offshore wind, or anything else like that. If not, we are going to have this kind of debate every time: “How much does Wales get?”, “How much does Cornwall get?”, “How much does Devon get?”. It would be much better if it was agreed—I am not sure by whom, but there has to be someone in this Government—where this line was and everything that leads from there.

While I am on my feet, I would like to ask my noble friend the Minister where the Duchy of Cornwall and its offshore or beach interests come into this, if at all. The Duchy of Cornwall has the right to treasure trove if treasure is found in Cornwall, and that goes into the coffers of the Duke of Cornwall—as opposed to in the rest of the country, where it would go into the coffers of the Government. Again, it would be nice to know where the boundaries are. It would be much easier to have a good debate about them if we knew where the start and finish were.

My Lords, my noble friend Lady Humphreys spoke not just for the Welsh Liberal Democrats but for all of us on these Benches. At Second Reading I, among others, raised the significance of devolution to Wales and asked that this should come as rapidly as possible, for a variety of reasons which have been discussed today. I do not want to repeat arguments but there are a couple of points I will pick up.

First, I say to the noble Lord, Lord Macpherson, that this nonsense that the money for the monarchy is then translated into a percentage of the profits that come from the Crown Estate is idiosyncratic and should stop right now. These are two entirely different sets of decisions, and we should separate them. I hope the Government will at some point in the process of the Bill deal with that particular nonsense—if not, if they could deal with it in the Budget that would be extremely helpful.

Secondly, the Crown Estate of the past is not the Crown Estate of the future. In the past we have had a body that has been focused on property management, very gradually getting into economic growth, levelling up and sustainability; now, the borrowing powers envisaged make for a complete step-change in that area. Not having the proper authority resting with the Welsh Government that devolution would provide therefore becomes far more egregious than it has been historically. The time has definitely come to recognise that, with this Bill, we are changing in many ways the character of the Crown Estate and its level of activity. It is time, therefore, to make the appropriate step and ensure that Wales and the Welsh voice are properly reflected through the Welsh Government’s control of the Crown Estate in Wales.

Thirdly, my last point is one that was reflected in the speech of the noble Lord, Lord Hain, and somewhat in the speech of the noble and learned Lord, Lord Thomas. The argument has always been put that, if we split off the Crown Estate in Wales, we are building in an inefficiency, particularly within the energy sector: we would have another player; it would be more complicated; and the management would be somewhat split.

It made me interested to take a look at the Crown Estate in Scotland. The Committee will be aware from various speeches that the assets controlled by the Crown Estate in both England and Wales are in the arena of £15 billion—it is a huge asset bloc. In Scotland, the bloc is far smaller. I looked at the last annual report and found that it is about £650 million in assets. I would guess that Wales is not that much smaller. In other words, we know that Scotland is functioning well—I hear no complaints from voices in Scotland about the way that the Crown Estate is working under the auspices of the Scottish Government—and so I see no reason why there would be necessary inefficiencies by splitting off a similarly sized set of assets to be governed by the Welsh Government.

Building collaboration is obviously the answer. To pick up the point the noble and learned Lord, Lord Thomas, made, collaboration and co-operation is the language that this Government are continually using and the approach that my party supports. It underpins a sense of democracy and fair dealing, which is very important in modern-day politics. I hope that the Government will look again at this and, if they cannot make changes in this specific Bill, promise that those changes are coming, and coming soon.

My Lords, I am enormously grateful to all noble Lords who have spoken before me in this debate today. Predominantly, this is obviously around the devolution of powers over the Crown Estate in Wales to the Welsh Government. On these Benches, we have thought long and hard about this, and I hear the concerns of some noble Lords about how the devolved powers differ between Wales and Scotland and, indeed, Northern Ireland. But this is not a unique situation and I have concluded that I would encourage the Minister to resist any change at this time.

A number of noble Lords have raised certain challenges as to why this might be a good or a bad idea, and I look at this in a purely practical sense. If I look at the documents that have been provided and are available not only for the Crown Estate but also the Crown Estate’s relationship with GB Energy—the enormous commitment that the Crown Estate has made in terms of the amount of seabed licences it wishes to grant to enable energy generation by 2030—I agree with the noble Baroness, Lady Kramer, that change is coming and coming very significantly for the Crown Estate. In 10 years’ time, it is not going to look the same as it does now. Therefore, I think that we would introduce risk into what is already a very ambitious target set down by the Government to develop offshore wind should we be sidetracked by the desire to devolve limited powers over the Crown Estate at this time.

It is also worth bearing in mind that the Crown Estate is very clear in its documents—and I think the Committee will discuss this a bit more later—that it is an independent business and competes against the private sector. Splitting it at this time and taking out a chunk of the assets and going through all the procedures as to how you recognise those assets—as pointed out by the noble Lord, Lord Berkeley—and how you think about which revenue streams go where would be a sideshow.

I note the point made by the noble and learned Lord, Lord Thomas, but I am going to run with it slightly. At the moment, the Labour-run Welsh Government do not have the best record of governance. Of course, that might improve in the future and progress may well be made, so I conclude by saying that we encourage the Minister to resist these amendments and we believe that they would be unwise at this time.

My Lords, I am very grateful to all noble Lords who have spoken in this debate in response to the amendments from the noble Lords, Lord Wigley and Lord Hain, and the noble Baronesses, Lady Smith and Lady Humphreys. I hope to be able to explain the Government’s rationale for retaining the existing structure of the Crown Estate.

First, let me set out how the Crown Estate currently operates and why the Government believe this remains the best approach. The Crown Estate Act 1961 requires the Crown Estate commissioners to manage the Crown Estate as a commercial enterprise to enhance long-term value and generate profit and to do so with due regard to the requirements of good management. A key purpose of the 1961 Act was to repeal various detailed statutory provisions that had built up over 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.

While the Crown Estate has goals which under its own strategy align with wider national policy objectives, the 1961 Act 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.

The Crown Estate is multibillion-pound public corporation, which is required to pay its profits into the UK Consolidated Fund each year, worth more than £4 billion over the past decade. Those revenues are then allocated to public service priorities by the Government, subject to the usual parliamentary controls. That is a valuable outcome, which we need to be careful not to undermine.

I turn to the amendments that deal with devolving the Crown Estate in Wales. I fully recognise that there are now two Labour Governments in the UK. While I believe that there is greater benefit for the people of Wales and the wider United Kingdom in retaining the Crown Estate’s current form, I shall of course continue to discuss these issues with the First Minister and the Secretary of State for Wales to ensure that Wales sees the full benefits of the Crown Estate and other forms of investment.

In response to the arguments made by noble Lords during this debate, I make a number of points. First, devolving the Crown Estate to Wales would most likely require the creation of a new entity to take on the role of the Crown Estate in Wales. This by definition would not benefit from the Crown Estate’s current substantial capability, capital and systems abilities. As my noble friend Lord Hain and the noble and learned Lord, Lord Thomas, referred to, this would indeed further fragment the UK energy market by adding an additional entity and, as a consequence, it would risk damaging international investor confidence in UK renewables and disrupting the National Energy System Operator’s grid connectivity reform, which is taking a whole-systems approach to the planning of generation and network infrastructure. That reform aims to create a more efficient system and reduce the waiting times for generation projects to connect to the grid. The cumulative impact of these effects would likely delay the pathway to net zero by decades.

Furthermore, the Crown Estate’s marine investments are currently made on a portfolio-wide basis across England and Wales. To devolve to Wales would disrupt these existing investments, since they would need to be restructured to accommodate a Welsh-specific entity. Let me give two examples. The first is the Crown Estate’s £50 million supply chain accelerator, which will match-fund early stage projects related to offshore wind leasing round 5, and the £50 million investment in the offshore wind evidence and change programme, which brings together government bodies, the industry and key stakeholders from across the UK to better understand environmental impacts of offshore wind.

The Minister has explained the need for a restructure. As Scotland has devolution of this dimension already, clearly it is not impossible for people to come together after devolution for Wales, too.

I shall go on to address some of those points further in my speech.

To devolve the Crown Estate at this time would also risk jeopardising the existing pipeline of offshore wind development in the Celtic Sea planned into the 2030s. The Crown Estate’s offshore wind leasing round 5 is spread across the English and Welsh administrative boundaries in the Celtic Sea. It was launched in February this year and is expected to contribute 4.5 gigawatts of total energy capacity, or enough to power 4 million homes. In addition to energy, the extensive jobs and supply-chain requirements of round 5 will also likely deliver significant benefits for Wales and the wider UK. Lumen, an advisory firm to the Crown Estate, has estimated that manufacturing, transporting and assembling the wind farms could potentially create around 5,300 jobs and create a £1.4 billion boost for the UK economy.

As I have said, devolution would also delay UK-wide grid connectivity reform. The Crown Estate is using its data and expertise as managers of the seabed to feed into the National Energy System Operator’s new strategic spatial energy plan. For Wales, the Crown Estate is working in partnership with the energy system operator to ensure that its current pipeline of Welsh projects, the biggest of which is the round 5 offshore wind opportunity in the Celtic Sea, can benefit from this co-ordinated approach to grid connectivity up front. Introducing a new entity, which would have control of assets only within Wales, into this complex operating environment, where partnerships have already been formed, would not make commercial sense.

Secondly, the Crown Estate’s assets and interests in Wales, as compared to its assets in England, are of a fundamentally smaller magnitude, which would very likely not be commercially viable if the costs were unsupported by the wider Crown Estate portfolio. The Crown Estate, in its present form, has the ability to take a longer-term approach to its investments and spread the costs of those investments across its entire portfolio. A self-contained, single entity in Wales would not have the same ability, nor would it benefit from the expertise that the Crown Estate has developed over decades in delivering offshore wind at scale. A devolved entity would be starting from scratch, midway through a multimillion-pound commercial tendering process, at a time when the Crown Estate is undertaking critical investment in the UK’s path towards net zero.

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

Thirdly, income generated by the whole Crown Estate portfolio currently benefits the people of Wales. As I have already noted, the Crown Estate pays its entire net profits into the UK Consolidated Fund each year, which both enables those revenues to fund UK government spending in reserved areas in Wales—for example, in policing—and supports the funding provided through the block grant. In comparison, if Wales were to benefit only from the income generated in Wales, then it would likely be zero or negligible for several decades to come. Welsh assets are relatively new and will take time to mature, likely in the order of 10 to 15 years. The Crown Estate has shown itself to be a trusted and successful organisation with a proven track record in both effective management and profit generation, which are valuable outcomes that we need to be careful not to undermine.

In answer to my noble friend Lady Ritchie, the Crown Estate is working closely with the Northern Ireland Executive and agreed a statement of intent last year confirming their joint aspirations towards establishing offshore wind leasing for Northern Ireland. I will write to my noble friend Lord Berkeley about the boundaries of the Duchy of Cornwall.

In answer to the noble Baroness, Lady Kramer, on royal funding, the sovereign grant is currently set by reference to 12% of Crown Estate profits; however, the Sovereign Grant Act includes a statutory requirement to review every five years the percentage rate used in this calculation to determine whether it remains appropriate. This review is conducted by the three royal trustees. Where necessary, the Government lay a statutory instrument to amend the percentage used. For example, following the royal trustees’ review last year, the rate was cut from 25% to the current 12%, and the next review will begin in 2026.

Amendment 1, tabled by the noble Lord, Lord Wigley, would require that

“The functions of the Crown Estate in Wales may not be exercised without the consent of the Welsh Government”.

The Crown Estate operates independently from government and, as such, does not currently require the consent of any Government for the exercise of its functions. The Crown Estate does not, for example, require the consent of the Treasury or Parliament to exercise its functions in England. Such an amendment would therefore give the Welsh Government disproportionate control over part of the Crown Estate, out of step with England and Northern Ireland. Further, if the wording of the amendment were interpreted as giving the Welsh Government the ability to block the Crown Estate from, for example, exiting loss-making or lower value activities, this could conflict with the core statutory duty of the Crown Estate commissioners to enhance the long-term value of the estate as well as hinder their ability to move into other activities in Wales.

Amendment 23, also tabled by the noble Lord, Lord Wigley, would require the Crown Estate commissioners to

“transfer all net profit generated from the Crown Estate’s activities in Wales to the Welsh Government on an annual basis”.

As the Crown Estate’s operations are not divided into business units for each nation, agreeing the exact net profit figure attributable to Wales is not straightforward, because most of the associated costs cannot easily be disentangled from the Crown Estate’s overall costs and would, in places, require subjective judgment. Further, as I have already set out, given that the Crown Estate takes a long-term approach to investments, it is anticipated that its investments in Wales could take up to 10 to 15 years to see an appropriate return. Therefore, if net profits were transferred to the Welsh Government now, they are likely to be zero or negligible.

I hope that these explanations have been helpful and that I have provided some clarity on these points. I hope that the noble Lords, Lord Wigley and Lord Hain, and the noble Baronesses, Lady Smith and Lady Humphreys, will not press their amendments as a result.

My Lords, before my noble friend sits down, I want to ask him specifically about what he said in relation to Welsh Government Ministers. I pressed him hard to talk to Welsh Government Ministers and consult on this matter. Nobody expects this to be done overnight or, indeed, relatively soon, given everything else and what he has said, but that seems to me the crucial thing which would release me from an obligation at least to press this on Report.

I am very happy to reiterate what I said: I will, of course, discuss these issues with the First Minister and the Secretary of State for Wales to ensure that Wales sees the full benefits of the Crown Estate and other forms of investment.

I am sure that the noble Lord, Lord Hain, listened to that response, as I did, with some amusement. If the line that the Minister is going to take in discussion with Welsh Ministers, who have very strong opinions on this matter, is the line that he has taken in responding to this debate, there is quite clearly not going to be a meeting of minds. We are talking about a Labour Government in Cardiff and a Labour Government in London, and this is going to be the backdrop to the politics that are running through the next few years, including the run-up to the 2026 election. I beseech the Minister to think more carefully about the way he is handling this.

The way in which the Crown Estate has been devolved in Scotland has not caused immense difficulties. They have been able to disaggregate the things that need to be disaggregated. It has been possible for the Scottish Government to get the benefits they need. The most important thing that I regard as coming from this sort of structural change is to give the Welsh Government the levers and powers—and the encouragement—to take initiatives themselves, to maximise the economic return that they can get in Wales and thereby to generate the income we need to run our government services. We do not want to be for ever and a day coming with cap in hand to the Treasury in Whitehall, begging for money.

On that point, perhaps it was the same noble Lord, Lord Macpherson, who was at the Treasury in 2010-11, when the Welsh Government had aggregated £400 million from money they had not spent on a revenue basis, in order to have a capital fund to build hospitals and schools, and the Treasury took back the whole £400 million. Being careful how they spent money at year end was a policy that the Labour Government in Wales could be proud of, but that is what the Treasury did to us. The Treasury is still, with the same game, trying to stop us taking initiatives on our own behalf to sort out our own problems.

I was grateful to the noble Lord, Lord Hain, who made a persuasive argument, and I hope we return to these matters on Report. I was naturally grateful to my noble friend Baroness Smith of Llanfaes—she will possibly come in on other debates on these matters. I realise where the noble Lord, Lord Macpherson, comes from on these issues. I too had a financial background; I was a financial controller in manufacturing industry and I know the responsibilities that go with finance. I also know the need to have the incentive and inducement to create the money that can then be used for the social services and all the other responsibilities of government —that is what we want to trigger and encourage in Wales.

I was grateful to the noble Baroness, Lady Humphreys, for her substantial speech, which laid out her party’s view. I am glad to see that the Labour Party in the Senedd Cymru, the Liberal Democrats and Plaid Cymru stand together on this, and, indeed, a number of Conservatives there do too, which perhaps Conservative colleagues could bear in mind.

The noble and learned Lord, Lord Thomas of Cwmgiedd, excellently summed up the whole thing. The problem that we have had down the years when it has come to wanting to take responsibility for doing things for ourselves rather than always going cap in hand to others to bail us out is that we are told we cannot do it, or that it will cut across the unity or the way the commercial sector sees it, et cetera. We have got to be able to stand on our own two feet, whether it is in the context of the structures of government we have now or different ones. As in the case of Scotland, we want to stand on our two feet and be able to pay our way in the world, and at least take responsibility on our own shoulders for doing that.

I take the point about Northern Ireland made by the noble Baroness, Lady Ritchie of Downpatrick, and, indeed, Northern Ireland is mentioned in some of these amendments. There is, of course, a need for a co-ordinated approach, but that does not mean that we have all to be lumped together under one overarching structure. The whole point of devolution is to give power and responsibility to those who are best placed to make the most of it, and, in this context, to develop and use our own resources. The noble Lord, Lord Berkeley, mentioned the situation in Cornwall, where there are resources that can be used and maximised for, I hope, the benefit of the people of Cornwall rather than for profits to be syphoned off elsewhere. The noble and learned Lord, Lord Thomas, mentioned our experience with coal, where we were left with the coal tips, industrial disease and all the environmental problems to clear up at our own cost, but when we try to do something about it, we are told we are not capable of doing so. Quite frankly, that is not acceptable.

I thank the noble Baroness, Lady Kramer, for painting her party’s viewpoint on a UK basis so clearly. Obviously, the response from the noble Baroness, Lady Vere, is not one I identify with; I am not entirely surprised as we have had such responses from Conservative Governments for many years. I am, however, surprised at the response from the Labour Front Bench, where we would have hoped for more.

There is currently a shortfall in the Welsh budget of some £250 million a year, which the Government are going to have to find. There is also an increasing dynamic to that figure: it will reach some £750 million by 2028. We want to be able to do something about it ourselves, so why do they not give us the tools we need to do the job when we are willing to take the responsibility to do it? I beseech the Labour Government to look at this again between now and Report. As the noble Lord, Lord Hain, suggested, they should speak to colleagues in Cardiff and try to get a solution that enables us to do more to help ourselves, rather than telling us for ever and a day to come with a begging bowl and hope that somebody will bail us out. I beg leave to withdraw my amendment.

Amendment 1 withdrawn.