I beg to move amendment 4, in clause 1, page 1, line 26, at end insert—

“(3) The Chancellor of the Exchequer must limit borrowing by the Crown Estate under this section by regulations made by statutory instrument, and these regulations may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(4) The first set of regulations made under subsection (3) must limit borrowing to a net debt to asset value ratio of no more than 25 per cent.”

This amendment would limit the amount the Commissioners may borrow by regulations subject to the affirmative procedure for statutory instruments.

With this it will be convenient to discuss the following:

Amendment 7, in clause 1, page 1, line 26, at end insert—

“(3) The Treasury must by regulations limit borrowing to a net debt to asset value ratio of no more than 25 per cent.

(4) A statutory instrument containing regulations under subsection (3) may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.”

This amendment would limit the amount the Commissioners may borrow by regulations.

Clause stand part.

It is a pleasure to serve under your chairmanship, Ms Furniss, and to get the Committee started this morning. The clause amends the Crown Estate Act 1961 to remove certain statutory restrictions on the commissioners’ powers, and it clarifies and expands those powers in certain respects. Specifically, it broadens the Crown Estate’s investment powers and confers a broader power to borrow, subject to Treasury consent.

As well as moving the amendment, I will speak to the clause. The Crown Estate Bill was conceived under the previous Government, and I am pleased that it has now progressed to this stage. We support the objective of the clause, which is to increase the Crown Estate’s ability to compete and invest, so that it maintains and enhances the value of the estate and the income derived from it.

As the Committee knows, assets managed by the Crown Estate are not the property of the Government, and nor are they part of the sovereign’s private estate. Since George III, the assets have been held in right of the Crown—in other words, they are owned by the Crown as an institution, not personally by the monarch. The concept of the Crown encompasses the interests of both the sovereign and the Government. That is why appropriate scrutiny of the Crown Estate is important. The Estate has assets worth £15.5 billion and a portfolio of 185,000 acres, and it manages roughly 7,400 miles of coastline. It is also the largest contiguous owner in the west end.

The Crown Estate returns all its net profits to the Treasury. In 2023-24, it recorded a net profit of £1.1 billion. Over the past decade, it has generated £4.1 billion for the nation’s finances, which is a laudable record, but there is the potential to do more. The Crown Estate estimates that the changes in the clause will enable it to generate £100 million per annum in additional revenues to the Treasury by 2030. That is forecast in the original business case that led to this legislation. It is therefore right that we should help to modernise the Estate as it aims to create lasting prosperity for the nation.

At present, the Crown Estate is limited to making investments in certain types of property and certain restricted types of security held on the Crown Estate’s behalf by the national debt commissioners. The Estate’s powers to borrow for the purposes of discharging or redeeming incumbrances affecting the Estate are very limited. The Bill will modernise the Estate by removing those limitations.

Although we support the borrowing power, we are concerned that there is a lack of parliamentary oversight over the borrowing levels. This is a new power. The Crown Estate should be prudent on the level of borrowing. The purpose must be supporting the Estate’s duty to maintain and enhance its value for maximised return to taxpayers. That is why we have tabled amendment 4, which would limit the amount the commissioners may borrow instruments. Specifically, the amendment would limit borrowing to a net debt-to asset value ratio of no more than 25% initially.

When pushed by Baroness Vere and other noble Friends in the other place, the Government stated that a limit on borrowing is better placed outside legislation and that controls would be set out in the memorandum of understanding between the Crown Estate and the Treasury. On Second Reading, the Minister repeated that, saying:

“There will, as has been noted, be a memorandum of understanding in place between the Treasury and the Crown Estate, and that will govern how borrowing powers will be exercised.”—[Official Report, 7 January 2025; Vol. 759, c. 805.]

The target borrowing level in that MOU sets out that the loan-to-value ratio should not exceed 25%. Given that the Government agree that there should be a limit, we should introduce robust safeguards in statute to protect against unconstrained borrowing. An MOU between the Treasury and the Crown Estate is easily altered at the stroke of a pen. If Parliament is being asked to remove the restriction to allow the Crown Estate to borrow, I struggle to see the logic in why the Government think that the cap they have committed to should not initially be set in legislation, with the ability to amend it by secondary legislation, if necessary. I would be grateful if the Minister could address those concerns and confirm whether the Government have considered this proposal since Second Reading.

A limit must be subject to the affirmative procedure, which is a proportionate step that will ensure that the Crown Estate can access that borrowing to maintain and enhance the value of its land, property, and interests for the benefit of the nation. However, borrowing can be risky, and this is a new power, so it should be subject to some controls and we should be cautious. I contend that amendment 4 is a perfectly reasonable check on the borrowing power, and I hope we can get the Committee off to a positive start, with the Minister accepting it.

Amendment 7 is similar to amendment 4, and is supportive of its essence. It is about introducing a sensible borrowing limit for the Crown Estate commissioners by capping their net debt-to-asset value ratio at 25%, with any change to that limit requiring parliamentary approval.

As we have just heard, clause 1 as it stands grants the Crown Estate significant new powers to borrow and access financial assistance from the Treasury. Although investment in the Crown Estate’s portfolio—particularly in areas such as offshore wind—is welcome, it is vital that we ensure fiscal responsibility and protect the long-term value of these assets for the nation.

Amendment 7 is about introducing proper safeguards. The Crown Estate manages over £16 billion in assets, and its revenues contribute directly to the Treasury and public finances. Without a clear borrowing limit, we could risk unchecked debt accumulation, which could ultimately undermine the Estate’s financial sustainability and reduce the returns it provides to the Exchequer. A 25% debt-to-asset ratio is a reasonable cap and allows for investment and growth, but prevents excessive leveraging that could put the Estate’s finances at risk. Crucially, the amendment also ensures parliamentary oversight. Any changes to the limit must be debated and approved by both Houses, rather than left solely to the discretion of the Treasury.

This is not about preventing the Crown Estate from borrowing; it is about ensuring that borrowing is responsible, transparent and aligned with the long-term interests of the nation. Given the Crown Estate’s unique status and the importance of its revenues to the public purse, it is only right that Parliament retains a say over any significant increase in borrowing capacity. The amendment would only confirm assurances that were provided in the other House by Lord Livermore. In his work with Baroness Kramer, we were assured that there would be a cap on borrowing to 20% of the loan-to-value ratio in the updated framework agreement. Amendments 4 and 7 reflect those promises, and I urge the Government to support amendment 7 to safeguard the financial integrity of the Crown Estate and ensure that borrowing powers are used wisely and with proper oversight.

It is a pleasure to serve on the Committee with you as Chair, Ms Furniss. I will turn to the amendments in a moment, but I will first briefly address why clause 1 should stand part, and what it would achieve in amending the Crown Estate Act 1961.

The clause amends the 1961 Act to clarify the powers of the commissioners and remove certain statutory restrictions in respect of borrowing. Those changes are central to the aims of the Bill, which are to modernise the Crown Estate and to remove limitations on investments, to ensure that it can meet its core statutory duties. Those duties—which it is right for the Crown Estate to pursue in the national interest—are to maintain and enhance the value of the estate and the returns obtained from it.

The Crown Estate is a commercial business, independent from Government, that operates for profit and competes for investment. However, limitations placed on it by the Crown Estate Act 1961 currently risk its ability to compete and invest most effectively, meaning that it is less able to deliver returns for the public purse than it might otherwise be. The clause therefore makes two main changes.

First, the clause clarifies the investment powers of the Crown Estate commissioners by expressly conferring powers that are currently implicit in the 1961 Act. That ensures that the commissioners have the power to do anything that is designed

“to facilitate, or is conducive or incidental to,” discharging their statutory duties, including their core duties to maintain and enhance the value of the estate. The clause also removes restrictions on the commissioners’ powers to invest.

Through those broader investment powers, the Crown Estate will have greater flexibility to invest in new growth opportunities—for example, in digital technologies, to support the acceleration of offshore energy through digital mapping of the seabed. These broader powers will also unlock the Crown Estate’s ability to under de-risking activities, such as surveys and grid co-ordination, which will increase the frequency of offshore wind leasing and support the clean energy mission.

Secondly, clause 1 inserts a proposed new section into the 1961 Act that would grant the Crown Estate the power to borrow out of the national loans fund via the Treasury, or otherwise subject to Treasury consent. It also authorises the Treasury to provide financial assistance to the commissioners. That change will unlock the Crown Estate’s ability to compete more effectively, by enabling it to borrow as its competitors currently can.

The clause has been carefully drafted to include the requirement for Treasury consent prior to the Crown Estate accessing debt. That strong safeguard will ensure that borrowing is carefully considered and controlled. Furthermore, as borrowing will be from Government at commercial rates, the interest paid by the Crown Estate will outweigh the cost to Government of the borrowing.

Any borrowing undertaken by the Crown Estate will be for investment in activities that will drive increases in its revenues, thereby also increasing the profits it generates and provides to the Government, which will help to provide funding for our public services. That will be a net benefit to the public finances, and builds on the Crown Estate’s long track record of delivering significant returns to the public purse year after year. As the shadow Minister mentioned, that has totalled more than £4 billion in the last decade.

I will now turn to amendments 4 and 7, which were tabled by the hon. Members for North West Norfolk and for South Cambridgeshire respectively. The amendments would place a legislative limit on borrowing, through regulations, but it is the Government’s view that limits on borrowing are best set outside of legislation. For that reason, a limit will be set in the memorandum of understanding between the Treasury and the Crown Estate, with the cap set at no more than a 25% net debt-to-asset value ratio. That document has been made available in draft to aid the House in its scrutiny.

The primary safeguard built into the Bill is the requirement for Treasury consent. We are also retaining the requirement for the Crown Estate to maintain and enhance the value of the estate, while having

“due regard to the requirements of good management”,

as set out in the 1961 Act. Taken together, those elements provide clear guardrails and strengthen the important fiduciary duty of the commissioners not to take decisions that could endanger the estate or compromise its core duties.

To underscore the point—given that the two Opposition Members raised questions about this—the Bill is clear that any borrowing undertaken by the Crown Estate can only be from the Treasury or otherwise with Treasury consent. The Treasury will, of course, ensure that any borrowing is consistent with our wider fiscal rules. Therefore, in addition to the requirement to secure Treasury consent, the draft memorandum of understanding between the Treasury and the Crown Estate sets out additional guardrails. For instance, it says that the borrowing should “target a sustainable range”, and is “not to exceed 25%” of the

“Loan to value ratio (defined as the ratio of net debt to asset value”

As with any public sector borrowing, the Treasury will ensure that this is consistent with managing public money principles, to ensure value for money from the taxpayer. On that basis, I hope hon. Members will not press their amendments.

As I said, clause 1 will provide the Crown Estate with the powers to borrow, subject to Treasury consent, and clarifies its investment powers. Together, these changes will modernise the Crown Estate, give it the tools it needs to compete more effectively in the commercial world and, as a result, increase the revenue it generates for the public purse. I therefore commend clause 1 to the Committee.

I am disappointed to hear the Minister’s response. He did not quite address the point that an MoU —I appreciate that he has provided a draft to the Committee—can simply be changed if Ministers and the Crown Estate decide they want to change the level. Only in the last week or so, we have passed into law the charter for Budget responsibility, setting out the Government’s fiscal rules in statute, so I am not sure why there is an in-principle objection to setting out such borrowing in legislation. I think that that would be a prudent step, as we and the Crown Estate embark on a new period with this borrowing power. I will therefore push my amendment to a vote.

Question put, That the amendment be made.

The Committee divided: Ayes 3, Noes 9.

Question accordingly negatived.

Clause 1 ordered to stand part of the Bill.