My Lords, I thank the noble Baronesses, Lady Vere and Lady Smith, the noble Lords, Lord Young, Lord Holmes and Lord Wigley, and the noble Earl, Lord Russell, for raising these very important issues concerning the governance and management of the Crown Estate. I should emphasise again that the intention of the Bill is to afford the Crown Estate greater flexibility to ensure that it can successfully compete in commercial markets to deliver maximum benefits for the nation.

The noble Baronesses, Lady Vere, Lady Smith and Lady Kramer, asked about the number of commissioners. This change reflects the growing diversity of the Crown Estate’s business and will ensure that the Crown Estate can meet best practice standards for modern corporate governance. This will help to broaden the diversity of the board and provide more breadth of expertise and capacity to enable the commissioners to operate more effectively in the constantly evolving business environment. The Bill provides for a maximum number of 12 commissioners, up from eight at present. However, within this limit, the exact number of commissioners serving at any one time will be in the light of advice from the Crown Estate’s board on where it considers additional board-level expertise would be beneficial to the business.

I will start by addressing the issue of the appointment of commissioners to the Crown Estate’s board, reflecting on Amendments 12 and 22, tabled by the noble Baronesses, Lady Vere and Lady Smith. Amendment 12, tabled by the noble Baroness, Lady Vere, would require scrutiny by the Treasury Select Committee or any successor committee of all future proposed commissioner appointments, including the chair, before any appointment can be made. Let me first emphasise that all Crown Estate commissioner appointments are governed by the Governance Code on Public Appointments. The code is clear that commissioners must be selected based on expertise and experience.

As I have previously set out, the Crown Estate operates independently of the King and of government. Affording Parliament the opportunity to scrutinise potential appointments before they are made would significantly alter the appointments process, in a way that would change the relationship between the Crown Estate, government and Parliament. The Cabinet Office’s existing guidance on pre-appointment scrutiny is clear that it should apply only where posts play a key role in the regulation of actions by the Government, protecting and safeguarding the public’s rights and interests in relation to decisions and actions of the Government, or roles where organisations have a direct major impact on public life. It is the Government’s view, as it was of the previous Government, that the Crown Estate’s commissioner posts do not fit these criteria and that it would therefore be inappropriate to require pre-appointment scrutiny.

It should also be noted that pre-appointment scrutiny of roles elsewhere in public life is limited largely to the role of chairs. Therefore, even if the Cabinet Office’s criteria were satisfied, it would be disproportionate and unusual for all commissioner appointments to be subject to such scrutiny. In addition, requiring pre-appointment scrutiny for non-executive commissioner posts, which are not high profile or public facing, may deter some candidates from applying. As I have set out, this would be inconsistent with existing pre-scrutiny arrangements, which are generally restricted to chair positions. Consequently, this might put at risk securing candidates of the necessary quality and calibre to the board and present a more fundamental risk to the overall management of the Crown Estate.

Amendment 22, tabled by the noble Baroness, Lady Smith, would see the nomination of commissioners from the House of Commons, the Welsh Senedd and the Northern Ireland Assembly via procedures to be determined by the Speaker of each legislature. The amendment would also require His Majesty to ensure equal representation of any individuals nominated in this manner by legislatures. The Government fully recognise the importance of ensuring that appropriate candidates are appointed to these significant public posts, and the need to ensure diverse representation on the board. However, allowing national Parliaments to nominate commissioners would risk politicising the Crown Estate. It is absolutely right that the Crown Estate remains free from direct political influence, as intended under the 1961 Act. Politicising appointments in this way would impede the ability of the organisation to operate independently.

Amendment 13, tabled by the noble Lord, Lord Young of Cookham, would require one commissioner to have responsibility for ensuring that the Crown Estate abides by public undertakings given on its behalf. I know that this is an important issue for the noble Lord, and I thank him for raising it. Under the Crown Estate Act 1961 and specifically the duty to have due regard to the requirements of good management, the commissioners are already required to ensure that they comply with their public undertakings. Placing such responsibility on one individual would, in the Government’s view, undermine the Crown Estate’s long-held principle that all commissioners have equal responsibility for the actions, purpose, risk appetite, strategy and values of the Crown Estate. In respect of the interaction between escheat and public undertakings given by the Crown, raised by the noble Lord, Lord Young of Cookham, the 20 September letter from the ombudsman that he refers to has not been seen by the Treasury or the Crown Estate. I hope he will allow me to look into the matters he raises further and come back to him. I am of course very happy to meet with him if he would find that helpful.

This may not satisfy my noble friend Lord Berkeley, but a number of existing governance arrangements are in place to ensure that the Crown Estate is accountable for the exercise of its statutory functions. This includes the requirement for the Crown Estate to lay a report and its accounts before Parliament, audited by the National Audit Office, setting out the performance of its functions in that year. In addition, the Crown Estate has an accounting officer who is answerable to Parliament for the stewardship of the Crown Estate’s resources.

The noble Lord, Lord Lansley, raised Section 3(1) of the 1961 Act. As I understand it, it requires the Crown Estate to have regard to all the circumstances of a case when evaluating best consideration. The Crown Estate includes social and environmental benefits alongside financial value and considers portfolio applications for both the short and the longer term, as well as the specific proposal, aligning with its broader purpose to create lasting and shared prosperity for the nation as it maintains and enhances the estate. For emerging sectors and nature recovery, applying best consideration in this way, by adopting a portfolio approach which balances financial drivers with broader value creation in different situations, has enabled the Crown Estate to support sector development and scaling to create long-term value.

For instance, floating wind test and demonstration sites prioritise innovation and enabling new technology over immediate financial returns. Although the initial commercial return may be lower, the long-term value from floating wind for the nation will lead to greater value over time. The Crown Estate structured the commercial terms for the Morlais tidal stream demonstration to support technology development and invested over £2 million in data-gathering to benefit the wider tidal stream sector, with a view to realising longer-term financial and social value.

The Crown Estate does not charge environmental organisations for leasing the seabed to enable non-commercial pilot activity linked to nature recovery and restoration. It is working with restoration practitioners to understand how best to accelerate activity to deliver seascape-scale projects. This comprehensive strategy demonstrates its commitment to considering all circumstances in evaluating what represents best consideration in each case. If I have not sufficiently covered the question from the noble Lord, Lord Lansley, I will happily write to him.

I turn to the matters raised by the noble Lord, Lord Holmes. Amendment 18 would require the Crown Estate to publish a review assessing the inclusivity of its policies, practices, procedures and assets. In particular, the review would consider the Crown Estate’s corporate governance and assess whether new board roles are required to support inclusion. While I wholeheartedly agree with the sentiment of the amendment, I stress that the Crown Estate already takes the matter of inclusion very seriously. For example, it has recently launched an open-source measurement tool to help commercial property owners assess and improve building inclusivity. It has also co-created an inclusive design brief for new developments and established the Accessible and Inclusive Places Industry Group to foster sector-wide collaboration.

Amendment 19 would require the Crown Estate to review its methods of stakeholder consultation and to consider alignment assemblies as a method of involving local communities in decision-making. The Crown Estate already engages extensively with stakeholders across all its business areas. In addition, it has a clear value creation framework which ensures that all its decisions, including in relation to its strategy and investments, are considered through an environmental and social lens.

On reporting, Amendment 24, tabled by the noble Lord, Lord Wigley, would require the Crown Estate to disaggregate, in its accounts, capital and revenue for England, Wales and Northern Ireland. At present, the Crown Estate’s operations are not divided into business units by nation. Disaggregating costs associated with the activity in each nation is a complex task which would inevitably require a high degree of subjective judgment. While it is possible to identify gross revenues from each nation, reporting these without costs would be entirely misleading. Therefore, it is the Government’s view that it remains appropriate for the Crown Estate to continue to report on a whole-business basis, supplementing its annual report with its Wales review.

Amendment 31, tabled by the noble Earl, Lord Russell, would make it clear that commissioners may waive lease fees in exchange for full or part ownership of any projects or development. While the Government recognise the sentiment behind the amendment, the Crown Estate already has such flexibility. Section 3 of the Crown Estate Act 1961 states that it should get

“the best consideration in money or money’s worth”,

which would allow the Crown Estate to accept consideration in forms other than monetary payment, valued on a fair basis.

Finally, I will seek to address the concerns raised by the noble Baroness, Lady Vere, in respect of disposal of assets. The Government’s view is that imposing a limit on disposals would undermine the flexibility needed to enable the Crown Estate to operate commercially and meet its core duties under the Act. For example, there may be instances where it makes commercial sense to dispose of high-value assets, particularly when taking a longer-term view of the business and its strategy. However, I understand there may be concerns in respect of the Crown Estate’s ability to fundamentally change the nature of the estate. Under the 1961 Act, the Crown Estate is required to maintain an estate in land, and this fundamental basis is not altered by the Bill.

I hope that I have been able to provide the appropriate reassurances to noble Lords—